BABA rallies in Hong Kong as China mulls changes to audit access

Alibaba stock soars in Hong Kong, up nearly 3%.
Delisting fears may finally be clearing way for Chinese stocks.
BABA stock is already surging in Monday’s US premarket.

Alibaba (BABA) stock is once again making gains in the premarket following on the back of some solid gains for BABA in Hong Kong overnight. BABA stock is currently ahead by nearly 4% in early Monday premarket trading.

Alibaba Stock News

The main reason behind this gain is news that China may relax restrictions on audits of some of its firms that are listed in the US. The back story is of course the ongoing delisting fears that have hung over the Chinese tech stocks listed in the US. This kicked off back two years ago when the proposed Alibaba (BABA) spin-off of ANT Group was halted at the last minute. This was due to apparent criticism from BABA chairman Jack Ma, but it did bring Chinese attention to US-listed stocks.

Thus began a regulatory crackdown with various names dragged into the melee. DiDi Global (DIDI) was one of the most successful US IPOs, but the shares collapsed as the threat of delisting hung over the stock. The latest news from the China Securities Regulation Commission (CSRC) is that it plans to revise confidentially tules that could pave the way for US regulators and auditors to have access. This would remove the threat of delisting in the US from the SEC. Bloomberg reported last week that such access could be made to US auditors by the middle of 2022.

Alibaba Stock Forecast

After the recent recovery rally, BABA stock has consolidated around the $110 to $120 level. Consolidation is usually a chance for the stock to regroup before continuing in the direction of the current trend. The problem with BABA is that the current trend is positive, but the longer-term one is hugely negative. So it is some job to turn around that negative sentiment. Doing so likely means BABA needs to break $138. This is the low from October 2021, and then the level acted as resistance in January. There is also a noted volume gap from $130 to $160, which could see the move accelerate. $110 is the key level to hold above to give this movie a chance.

 

Alibaba (BABA) stock chart, daily

The author is long BABA.

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