NEW DELHI: Didi Global plunged on Tuesday in US trading as the ride-hailing company faced scrutiny over its data security and a broader Chinese crackdown on companies listing their shares abroad.
China’s State Council issued a sweeping warning to China’s biggest companies, vowing to tighten oversight of data security and overseas listings. That announcement followed the opening of a security review by China’s internet regulator last week and a demand for app stores to remove Didi.
Didi’s American depositary shares fell as much as 25% to $11.6, wiping out about $22 billion of market value and taking the stock below the $14 price from its initial public offering. Beijing-based Didi controls almost the entire ride-hailing market in China and raised $4.4 billion last week in the second-largest US IPO for a Chinese firm.
The State Council’s broadside marked an escalation in President Xi Jinping’s campaign to bring the nation’s technology firms — and their reams of valuable data — under control. Over the weekend, China also moved against two other companies that also recently listed in New York — Full Truck Alliance and Kanzhun.
“Since there is no mechanism in place for cross-border supervision of securities, conducting a security review on data could serve as an effective tool for Chinese regulators to rein in overseas listed companies,” Xia Hailong, a lawyer at the Shanghai-based Shenlun law firm said.
The Didi probe stunned investors, hammering the Hong Kong shares of peers from Tencent to Alibaba and Meituan. Investors worry that the latest security-based probes have opened a new front in Xi’s broader campaign against China’s internet giants that began in November with the collapse of Ant Group’s IPO and subsequent antitrust probes into Alibaba and Meituan.
