NIO Shares: Should You Buy Them on SGX, NYSE or HKEX?

Billy Toh

November 8, 2022

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In May of this year, Chinese electric vehicle (EV) maker NIO Inc (NYSE: NIO) (SEHK: 9866) (SGX: NIO) successfully listed its Class A ordinary shares on the Main Board of the Singapore Exchange (SGX).

In doing so, NIO became the first automotive company listed on three global exchanges: the New York Stock Exchange (NYSE), Hong Kong Stock Exchange (HKEX) and SGX.

It is also the first Chinese company to be listed in New York, Hong Kong and Singapore.

NIO was one of the top picks that I highlighted in my recent article as the EV maker continues its path towards profitability in FY2024.

However, given the choice to invest in NIO stock via three different exchanges, which shares should you buy?

As an investor, I would prefer to buy NIO shares on the SGX. Here are some key reasons for that rationale.

1. Risk of NIO delisting in the US

Several companies in China face losing their position on US stock exchanges for not opening their books to US auditors.

In August, US and China reached a preliminary deal that will allow US officials to audit Chinese businesses that are listed on US stock exchanges.

While the risk of delisting in the US has been reduced with the preliminary deal, the fragile state of US-China relations continues to pose a big risk for any US-listed Chinese stock, including NIO.

Personally, I believe that the delisting fears are overexaggerated. However, the impact of delisting in the US would have a severe impact on investors.

2. China factor

As mentioned earlier, the risk of delisting in the US would be detrimental to investors, which leaves us both with the HKEX and SGX.

One of the core differences between both countries is their relationship with China: Hong Kong is a special administrative region (SAR) of China, while Singapore is a country that is independent and separate from China.

Although Hong Kong is a part of China, it retains unique advantages in resolving China-related disputes.

However, as China expands its influence in Hong Kong, investors who are weary of China’s influence – and political or domestic instability – then the SGX would be a better option given the independence and neutrality of Singapore’s government.

Buy SGX’s NIO shares to tap a structural growth story

Despite of the continuation of the COVID-Zero policy in China, the Chinese government has maintained its strong support in promoting the adoption of EVs in the country.

Given strong EV deliveries, NIO’s expansion into Europe and its path towards profitability in FY2024, investors who want to tap into the structural growth story of EV over the next decade will want to buy the SGX-listed shares instead of the HKEX or NYSE ones.

Investors will sleep easier at night without the geopolitical headache of buying the HKEX and NYSE shares.

Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.

About the Author: Billy Toh

Billy is passionate about the capital market and believes in investing for the long haul. Prior to this, he was an economist at RHB Investment Bank, covering Thailand and Philippines market. He also worked as a financial journalist at The Edge Malaysia and has experience working with an asset management firm. Aside from the capital market, Billy loves a good conversation over a cup of coffee, is a fitness enthusiast and a tech geek.