China’s Big Tech Crackdown Puts Dozens of U.S. IPOs at Risk


Yahoo Finance 06 July, 2021 - 03:16am 48 views

Who owns Didi?

When I spoke to Didi Chuxing's founder Cheng Wei in 2018, the one thing that was apparent was that this was a man on a mission. He wanted to take the Chinese firm global, and to offer a new vision of what a company driven by data could make possible. BBC NewsDidi says removal of app in China will affect business

As Beijing probes Didi Global Inc. -- China’s version of Uber -- and two other firms that recently debuted on Wall Street, global equity managers are questioning if the regulatory threat posed by the Asian nation’s increasing efforts to control big data is a risk worth taking.

“The Didi situation reinforces the fact that China is annoyed by the flood of U.S. IPOs by Chinese tech companies, and is attempting to slow the reception of these IPOs in the West,” said Hans Albrecht, portfolio manager at Horizons ETFs Management Canada Inc. “While Chinese names look like better value, they will suffer from this overhang for some time.”

Beijing’s latest crackdown on the technology industry threatens to chill investor sentiment at a time when there are as many as 34 pending filings for U.S. listings by firms based in China or Hong Kong announced this year, according to data compiled by Bloomberg. Such deals have been running at a record pace, with more than $15 billion priced in New York IPOs so far this year.

QuickTake: What Is Didi and Why Is China Cracking Down on It?

Didi’s shares plunged more than 25% in U.S. premarket as trading resumed after Monday’s holiday. That follows a 5.3% drop on Friday after China said it’s starting a cybersecurity review of the ride-hailing company. The regulator said two days after later that the firm had committed serious violations in the collection and usage of personal information. It then ordered the company’s app to be removed from stores.

China is also probing Kanzhun Ltd., the owner of an online recruitment platform, and Full Truck Alliance Co., an Uber-like trucking startup. Both companies listed in the U.S. recently. Their shares also dropped in U.S. premarket trading Tuesday.

“The Chinese government could have stopped the IPOs from happening, like how they did with Ant,” said Sharif Farha, a Dubai-based portfolio manager at Safehouse Global Consumer Fund. “Instead, they allowed global investors to take pain, and consequently have broken trust with a lot of foreign investors. While we did not participate in any of these listings, we would imagine that several funds would consider exiting.”

One company poised to test sentiment soon is Hong Kong’s on-demand logistics and delivery firm Lalamove. It filed confidentially for a U.S. initial public offering last month, according to people with knowledge of the matter, and is seeking to raise at least $1 billion.

The latest crackdown is “very bad news for these Chinese companies’ image abroad,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Group Holdings SA. “It’s a terrible hit to foreign investor appetite.”

READ: Didi Shows China’s Tech Giants Must First Answer to Beijing

(Adds Didi’s share move in the fifth paragraph.)

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Investors will return on Tuesday to a holiday-shortened week, with the stock market closed Monday in observance of the Fourth of July in the U.S.

HONG KONG/LONDON (Reuters) -Didi Global Inc shares slumped as much as 25% in U.S. pre-market trade on Tuesday, ahead of its first session since Chinese regulators ordered the company's app be taken down days after its $4.4 billion listing on the New York Stock Exchange. The ride-hailing giant's app was ordered to be removed from mobile app stores in China on Sunday by the Cyberspace Administration of China (CAC) which followed an official investigation into the company's handling of customer data. In pre-market trade on Tuesday, Didi shares fell as much as 25% to $11.59, well below its debut price of $16.65 on June 30.

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(Bloomberg) -- Didi Global Inc. plunged in premarket trading after a Chinese regulator ordered the removal of the company’s platform from app stores, days after a $4.4 billion initial public offering in the U.S.Shares of the China-based tech firm fell as much as 30% to $10.90, wiping out about $22 billion of market value and taking the stock below the $14 IPO price. They traded at $12.17 as of 6 a.m. in New York.The Cyberspace Administration of China barred new users from Didi’s app, citing secu

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It isn’t known whether Didi carried out its own review, according to the WSJ report. The Cyberspace Administration of China (CAC) launched the investigation into Didi on Friday, just two days after the company began trading on the New York Stock Exchange.

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After crackdown on Didi, China opens cybersecurity probes into 3 more tech firms

CNBC 06 July, 2021 - 05:02am

GUANGZHOU, China — Chinese regulators have opened a cybersecurity review into U.S.-listed Boss Zhipin and subsidiaries of Full Truck Alliance.

The Cyberspace Administration of China (CAC) said the probe had been opened to "prevent national data security risks" as the crackdown on the country's technology sector continues.

Yunmanman and Huochebang, subsidiaries of the New York-listed Full Truck Alliance were two of the firms named by regulators. Boss Zhipin, an online recruitment platform backed by tech giant Tencent and listed on the Nasdaq, was also targeted by the CAC.

During the cybersecurity review, these companies are not allowed to register new users.

U.S. markets are closed Monday so the stocks will not reflect investor reaction until Tuesday.

Shares of major technology companies listed in Hong Kong including Tencent and Meituan were trading lower on Monday morning.

The latest regulatory crackdown comes after the CAC ordered China's app stores to remove ride-hailing app Didi for download just days after its initial public offering in the U.S. The regulator alleged Didi had illegally collected users' personal information and asked the company to fix the problems.

Data is a big focus for the Chinese government in a broader attempt to regulate the technology sector which has grown largely unchecked over the years. In June, Beijing passed a new Data Security Law that lays out how companies collect, store and use data.

Beijing is also focusing on antitrust and financial technology regulation. In April, e-commerce giant Alibaba was slapped with a $2.8 billion fine in anti-monopoly probe while food delivery firm Meituan is currently being investigated under the same rules.

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