Didi withdraws from the NY stock market, under pressure from the Chinese authorities

Didi withdraws from the NY stock market, under pressure from the Chinese authorities

Didi, the well-known private transportation service company, announced this Friday that it has decided to withdraw from the New York Stock Exchange –After only five months after starting to be listed on it–, to go public in Hong Kong, mainly due to pressure from Chinese regulators.

“After careful investigation, the company will immediately begin delisting on the New York Stock Exchange and will begin preparations for listing in Hong Kong,” Didi said on his Weibo account, the Chinese social network that is similar to Twitter. .

According to Reuters, his sources reported last month that Chinese regulators lobbied top Didi executives to devise a plan to remove the company from the New York Stock Exchange, due to data security concerns.

In June, Chinese authorities began conducting a review of Didi’s data practices, and then the China Cyberspace Administration ordered app stores to remove 25 of Didi’s mobile apps, telling the company that stop registering new users, citing national security and public interest. Didi is currently under investigation.

Didi’s exit from the New York Stock Exchange illustrates both the enormous influence Chinese regulators possess and their challenging approach to exercising it., and it is a situation that could further deter Chinese companies from listing in the United States.

In this regard, Wang Qi, CEO of fund manager MegaTrust Investment, said that Chinese companies listed in the US face increasing regulatory challenges from US and Chinese authorities, as it is difficult to try to please both parties.

Now, Didi’s goal is to start trading in Hong Kong in the next three months and to be removed from the New York list by June 2022, according to one of the Reuters sources, who, since they are not authorized to speak to the media of communication, they asked not to be identified.

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Didi provided 25 million trips a day in China during the first quarter, according to its initial public offering prospectus. Made its New York debut on June 30 at $ 14 per US deposit share.But those stocks were down 44% at the end of Thursday, valued at $ 37.6 billion.

Its main shareholders are SoftBank’s Vision Fund, with a 21.5% stake, and Uber Technologies Inc., with 12.8%, according to a document presented in June by Didi.

Sources have also told Reuters that Didi is preparing to relaunch its apps in China by the end of the year, anticipating that Beijing’s cybersecurity investigation into the company would be concluded by then.

Didi’s decision affects Chinese companies listed in the US.

Didi withdraws from the NY stock market, under pressure from the Chinese authorities

US shares of Alibaba, Baidu, JD.com and other Chinese firms fell on Friday as Didi’s decision to withdraw from the New York Stock Exchange raised concerns about stricter regulatory scrutiny in the country, as well as strained relations between China and the United States.

Shares of Didi fell 6.5%, while large companies such as Alibaba, Baidu and JD.com lost between 4.5% and 5%, with investors nervous as Beijing targets sectors ranging from games to education.

Education companies TAL Education and New Oriental Education & Technology Group fell 4.5% and 6%, respectively.

KraneShares CSI China Internet ETF fell about 4%, the lowest level in nearly two years, while e-commerce platform Pinduoduo, mobile game publisher Bilibili, and live streaming game platform operator HUYA fell between 5% and 6%.

Meanwhile, the U.S. Securities and Exchange Commission said Thursday that Chinese companies listed on the US stock exchanges must disclose whether they are owned or controlled by a government entity, and provide evidence of their audit inspections.