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Chinese ridesharing service Didi to exit US stock market amid tech crackdown

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China’s dominant ridesharing service Didi Global Inc. has announced it will pull out of the New York Stock Exchange and move its shares to Hong Kong as the ruling Communist Party tightens its control over tech industries.

Didi has offered no explanation, but Chinese officials are increasingly concerned about who controls the information collected about his audience by e-commerce, ridesharing and other tech companies. Beijing sees this as a valuable asset and a security risk.

Regulators said in July they would step up scrutiny of tech companies whose stocks are traded overseas and their information security and cross-border data flows.

Didi’s stock price fell 25% after regulators launched an investigation into its handling of customer data after its stock market debut on June 30.

“After careful research, the company will immediately begin delisting from the New York Stock Exchange and begin preparations for its Hong Kong listing,” Didi said on his social media account on Friday.

A separate statement said the US stocks would be converted into freely tradable stocks on another internationally recognized stock exchange.

Hong Kong is Chinese territory but has a separate regulatory system that allows foreigners to invest in its stock market. Mainland markets are mostly closed to foreign capital.

Tech entrepreneurs who are largely excluded from the public financial system have raised billions of dollars overseas. But the ruling party is worried about how this affects control over their businesses. It promises better access to capital in China.

Didi Chuxing raised around $ 4.4 billion when he started out in the market. The company had previously denied information that it planned to buy back its US shares.

Other companies, including Alibaba Group, the world’s largest e-commerce company, and Tencent Holding, which operates the popular messaging service WeChat, have also been affected by investigations into data security and monopolies.

Investor nervousness over the crackdown has caused the total market value of Chinese technology companies to drop by more than $ 1 trillion on both US and foreign stock exchanges.

Didi was founded in 2012 by Alibaba veteran Will Wei Cheng. Its chairman is Jean Qing Liu, former managing director of Goldman Sachs and daughter of Liu Chuanzhi, founder of computer maker Lenovo Group.

It expanded abroad in 2018 by acquiring 99 Taxis in Brazil and establishing itself in Mexico. Didi operates in 16 countries, although nearly 90% of the 493 million customers who have used the service at least once in the past year are in China.

Didi acquired rival Kuaidi in 2016 and Uber Technologies Inc.’s operations in China the following year. Other competitors in the $ 50 billion-a-year market include Caocao Chuxing, a unit of automaker Geely, and Hello Chuxing, backed by Alibaba.

Following its investigation, China’s cyberspace regulator said in July that serious violations had been discovered in the way Didi collected and stored personal information. Didi was then ordered to remove 25 of her apps from online stores.

Chinese companies have been selling shares overseas for two decades, but regulators have yet to say whether their financial structures comply with rules that ban foreign ownership of internet companies and limit access to other industries.

The ruling party is trying to capture more of their value for the Chinese public by encouraging companies to sell stocks in domestic markets.

The shares of a handful of mainland companies traded in Hong Kong can be bought by Chinese investors through mainland exchanges.

Meanwhile, a stock exchange created to serve entrepreneurs began trading on November 15 in Beijing.

Also Read: China Asks Didi To Withdraw From US Stock Exchanges Over Data Security Fears

Read also: Didi Global to start withdrawing from the New York Stock Exchange and continue its listing in Hong Kong

Sources

1/ https://Google.com/

2/ https://www.businesstoday.in/latest/world/story/chinas-ride-hailing-service-didi-to-leave-us-stock-market-amid-tech-crackdown-314423-2021-12-04

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