Chinese authorities announced a probe of the company’s data security practices shortly after its listing, but that investigation has not yet been closed. The company, which successfully held Uber out of its domestic market, owns a vast trove of data on Chinese users. The company’s market capitalization now sits at roughly $38 billion. Its shares tumbled even further Friday following the news of the delisting.
“Didi’s repatriation to [Hong Kong] is a significantly worrying indicator for the larger US-Sino economic relationship,” Brock Silvers, chief investment officer at Kaiyuan Capital in Hong Kong, told CNN. “Beijing essentially forced Didi’s hand. […] Didi’s repatriation looks likely to be the start of a trend, and the market should expect that others will follow. Equity investors may not wait for the other shoe to drop.”
“Chinese founders previously looked to [New York] for a number of reasons, including looser listing standards, often higher multiples and a domicile beyond Beijing’s financial [and] regulatory grasp,” Silvers added. “That calculus has rapidly changed, and today’s companies — especially established market leaders or those in certain tech sectors — will likely face increasing pressure to list on China-controlled exchanges.”