Friday, December 3 is a dark day for Chinese companies listed in the United States: after the announcement of the departure of Didi Chuxing, who is leaving Wall Street under pressure from Beijing, the major Chinese stocks have all unscrewed. In the wake of the Chinese leader in VTC Didi, which fell by 20%, Alibaba lost 11%, Baidu, 11.5%, JD.com, 6.5%, and Pinduoduo, 5%. On the Nasdaq, the Golden Dragon China Index, which tracks companies exposed to China, plunged 9.1% on Friday. Its worst performance since the 2008 crisis. Investors fear that Didi’s exit from the stock market is the signal of a major financial decoupling, paving the way for the departure of other Chinese digital giants, against a backdrop of tensions between United States and China.
“After careful consideration, the company began the process of delisting from the New York Stock Exchange with immediate effect and initiated the preparatory work for a listing in Hong Kong”, announced, Friday, Didi in a brief statement. Concretely, holders of Didi shares on Wall Street could be offered a transfer of securities when the group is listed on the Hong Kong Stock Exchange or a repurchase of their securities before this operation.
Didi’s announcement came hours after the adoption in the United States of more restrictive rules for foreign companies listed there. The US financial market regulator, the Securities and Exchange Commission (SEC), is now authorized to delist groups that do not have their accounts audited by an approved company. However, China, mindful of its sovereignty, forbids its companies to submit to such audits by foreign powers.
Fiasco
Anticipating a possible exclusion of Chinese stocks, discussed in Washington for more than two years, several tech giants, such as Alibaba and NetEase, have decided in recent years to launch “second IPOs” on the Hong Kong Stock Exchange, in addition of Wall Street. One way to limit risks by getting closer to Beijing and to investors who know them better. “This will inevitably lead to a discount for Chinese companies on the American stock markets, writes the Cowen investment bank in a note. We don’t think Congress and the SEC consider the benefit of letting Chinese companies outweigh the cost of not being able to inspect their audits. “
Didi’s departure from the stock market puts an end to a fiasco that lasted five months and saw the value of the company fall by 45%. On June 30, the group raised $ 4.4 billion (3.7 billion euros) on Wall Street, an operation that valued the company at $ 67 billion, not far from its former rival Uber. But, a few days later, the Chinese Cybersecurity Supervisory Authority launched an investigation against Didi, citing a “Data security issue”. In the process, the service was withdrawn from application stores in China and banned from recruiting new users. According to the Wall Street Journal, the introduction had taken place despite an unfavorable opinion from the Chinese regulator, Beijing not appreciating to see its nuggets leaving China for Wall Street and fearing transfers of sensitive data to the United States.
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