Alibaba Stock Hits Record Low in Hong Kong Amid Delisting Concerns. Here’s What to Know

Alibaba stock hit a record low in Hong Kong Thursday amid fears that the Chinese e-commerce giant may be forced to lose its primary listing in New York. Reports suggested that Chinese regulators will restrict companies’ abilities to list overseas, raising the prospect that Alibaba and other groups may be forced to ditch their listings on the New York Stock Exchange or Nasdaq.

The latest development on the regulatory front concerns variable interest entities (VIEs)—a corporate structure used by Alibaba and other Chinese companies to list offshore and sidestep Beijing’s rules concerning foreign investment.

China is planning to ban companies from going public overseas using the VIE structure, Bloomberg reported Wednesday, citing anonymous sources, though Hong Kong would be an exception subject to regulatory approval. The plans could be finalized as soon as this month, according to the report, and may require companies already listed overseas via VIEs to revamp ownership structures and be more transparent. This could mean that the most sensitive companies—for instance, Alibaba—may be required to delist in the U.S. VIEs are also under scrutiny from U.S. regulators.