What happened
Nio (NIO -5.00%) shares began trading on the main board of the Singapore stock exchange today prior to the opening of the U.S. markets. That brought the stock of the Chinese electric vehicle company its third country listing in addition to the U.S. and Hong Kong. After initially popping 20% early, the new shares ended up closing in Singapore about 2.4% higher, according to Barron's.
Those shares are fully interchangeable with Nio's American depositary shares (ADSs) listed on the New York Stock Exchange. That helped the shares pop as much as 5.6% in early New York trading today. But that correlation didn't hold, and Nio shares began to follow the U.S. markets lower as the day progressed. As of 1:30 p.m. ET, Nio's U.S.-listed shares were down 5% on the day.
Image source: Nio.
So what
The Singapore listing is significant for ADS holders since the company made the two listings fully fungible. One factor weighing on Nio shares has been the potential for delisting in the U.S. Nio has been added to a list of U.S.-listed Chinese companies that will have to be auditable to U.S. authorities' standards within three years.
Now what
But that's not the only reason for the new listing, according to Nio CEO William Li. In a statement, Li said the company plans to utilize the strengths of the technology sector in Singapore to establish a research and development (R&D) center there to focus on artificial intelligence and autonomous driving. Li added it would "collaborate with local science and research institutions to further broaden and enhance our global R&D capabilities."
For U.S. investors, the Singapore listing helps lower the delisting risk that has contributed to a decline in the shares. But the business will ultimately drive the direction of Nio's listed shares. While the R&D announcement may pay off in the future, the U.S. shares are trading down with the overall tech sector today.
