Delisting of Chinese companies from American exchanges began. The first is DiDi

Начался делистинг китайских компаний с американских бирж. Первая — DiDi

Chinese carrier DiDi, providing taxi and car sharing services, in the morning 3 December announced his departure from the New York Stock Exchange to the Hong Kong.

Rumors were confirmed

A possible delisting became known a week ago. Media learned, that the Chinese regulators "asked" the company to draw up a plan to leave the American site.

Rumored, the authorities offered DiDi two options: stop being public, that is, leave the stock exchange altogether, or transfer shares to a local site. In the first case, the company would have to return to shareholders 14 $ for paper. It was at this price that the recent IPO took place. DiDi chose the second option, only her shares, probably, will be even cheaper on the Hong Kong stock exchange, than now - 7,8 $.

Not only minority shareholders are losing due to negative news about delisting, but also large shareholders of DiDi. About a third of the company's shares are held by Japanese SoftBank and American Uber.

How it all started

DiDi IPO on the New York Stock Exchange at the end of June. The next day, the securities rose by 16%, from 14 to 16,4 $, and just a couple of days later, the China Cyberspace Authority began an audit of the company. At the time of checking DiDi was banned from registering new users. A week after the IPO, the company's shares fell by 21%, in three weeks - on 43%, to 8 $.

DiDi is the largest taxi-ordering service in China. The service stores a large amount of data about routes and users. The authorities were worried, what a public company, traded on the American stock exchange, may leak this data. Regulators offered to postpone the IPO and first conduct an audit, but DiDi refused.

This year, the Chinese authorities tightened control over the largest companies. In February, the government published new antitrust rules, and in August began drafting a data protection law. As a result, such companies suffered from the actions of the authorities., like Alibaba, Tencent, DiDi, VALLEY and Meituan. All this negatively affected the shares.. Index Nasdaq Golden Dragon China, which includes securities of companies traded in the USA, since the beginning of the year fell by 37%.

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Press on both sides

DiDi filed for delisting hours after, as the US Securities and Exchange Commission (SEC) obliged all Chinese companies to provide correct accounting data. SEC made amendments to the law and can now exclude unfair foreign issuers from the exchange. The head of the commission warned about such a scenario back in August..

More often, the need for such amendments was talked about last year.. Became known: management of Luckin Coffee, the Chinese equivalent of Starbucks, artificially inflates sales in reports. As a result, Luckin Coffee shares fell by 96%, and later they were completely removed from the exchange.

Probably, Chinese companies, who conduct their business honestly, would like to share the results of audits. Only the Chinese authorities prohibit it by law.. Investment in such companies is no longer a financial issue., but the political. As a result, the issuers themselves suffer, as well as ordinary investors. Especially those, what do they buy ADR on American exchanges.

Homecoming

maybe, most Chinese companies will start IPOs on local, not foreign exchanges. Chinese President Xi Jinping even promised to create another site in Beijing. Now there are three exchanges in the country: in Shanghai, Shenzhen and Hong Kong.

In the situation with DiDi, China made it clear, what is not interested, for its large companies to trade on foreign exchanges. It is not excluded, that DiDi will be followed by the rest.

If the company's securities are traded only on the US stock exchange, in case of delisting to an investor, most likely, have to sell them. And if the company is located at different sites, e.g. New York and Hong Kong, like Alibaba, broker will be able to transfer securities from one exchange to another. But Russian investors, who buy shares on local markets, probably, also have to get rid of them: nor "SPb-Exchange", nor Moscow's direct access to China still has.

Capitalization of the largest Chinese companies, which are only traded in the USA, billion dollars

Pinduoduo 83,3
Nio 67,5
DiDi 36,8
KE 23,8
Lufax 15,7
Full Truck Alliance 13,6
Kanzhun 13,1
Tencent Music 12,2
get in 7,0
Vipshop 6,6
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83,3

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