One more tech company is facing the wrath of the dragon, as Didi Chuxing is preparing to delist from the New York Stock Exchange.
The ride-hailing group’s exit is seen as China’s continuing decoupling from the US market. It is also a sign of China’s increasing regulations over their tech companies. The company is planning to shift to Hong Kong.
The company has declared that their board authorized the delisting from NYSE, especially its ADS. The ADSs will be converted into freely tradable shares, which is to be traded in other recognized international stock exchanges.
The arrival of news has created ripple effects in the market. The company’s share fell by 15% in New York, while Hong Kong’s Hang Seng Tech fell by 2.7%, Alibaba’s fell by 5.4%, Tencent’s index fell by 3.3%.
The company’s fate began to change after their IPO offering in June in NYSE. This was considered to be the biggest listing by any Chinese company since Alibaba’s entry into the US market in 2014.
Within a few days, many restrictions were imposed upon them.
On Thursday, the price of their shares fell by $7.80. During pre-market trade on Friday, it initially rose but fell later the day.
The Trump and Biden administration has targeted state-owned Chinese firms with investment bans, but that doesn’t deter the private tech companies from entering the NYSE.
This government action is considered as a warning to other companies.
The company’s IPO happened a week before the centennial celebration of CPC’s foundation, which angered them. They feared that such an entry into a rival nation would risk the sensitive data and map data that the company holds.
Other than the celebration, the time was made worse as it was, done amid the crackdown of China’s Big tech groups dominance.
Ant Group’s and Alibaba’s founder Jack Ma infuriated Xi after he criticised the nation’s regulations in a public event. Since then, he started to face the wrath of the government in the form of restrictions and regulations like the one mentioned above.
He even went missing for a long time. This could be the reason why the high-level officials of the Didi company are keeping a low profile. After this incident, Chinese companies are afraid to list their companies in New York.
The company announced their delisting before December end when the six-month lockup ends. This allows the executives and shareholders to dump their shares in New York.
The company will first seek a listing in Hong Kong and then only will they proceed further.
But the regulations in Hong Kong are a major hurdle. The company seems to comply with the regulations rather than question the government move.