Earlier this month, Beijing announced that home-grown businesses looking to list their shares on foreign soil would require approval from a cybersecurity regulator.
Some of the largest Chinese technology company stocks listed in the United States have been in a free-fall since the beginning of the month, as the Chinese regulator attempts to obstruct foreign listings. Stocks such as Alibaba, Pinduoduo, JD.Com, Baidu, and even the newly listed DiDi Global have dropped significantly since the end of June. Earlier this month, Beijing announced that home-grown businesses looking to list their shares on foreign soil would require approval from a cybersecurity regulator. Apart from this, the newly listed DiDi Global faced the wrath of the Chinese government, removing DiDi’s application from the app store and stopping it from signing new customers, just days after the company’s US IPO.
Chinese stocks coming falling down
*Alibaba Group Holding ADR – Down 8.22% so far this month, trading at $210.59 apiece
*Pinduoduo Inc – ADR – Down 23.44% so far in July to trade at $102.25
*JD.com – Down 7.44% so far in July, trading at $73.87 per share
*NetEase – Down 1.7% in July, trading at $113.2 apiece
*Nio Inc – Down 16.97% in July, trading at $44.17 per share
*Baidu Inc – Down 14.34%, trading at $177.89 apiece
*DiDi Global – Down 20.72%, trading at $11.21 per share
DiDi Global was listed on the New York Stock Exchange (NYSE) at the end of last month after a massive $4.4 billion IPO. The IPO was priced at $13-14 per share. The company went ahead with its IPO even though Chinese regulators asked it to delay the same. Two days after its Wall Street debut, DiDi Global — a former Uber rival in China — was being probed by the Chinese government for cybersecurity lapses.
“There has been a lot of noise generated in recent days about the Chinese regulatory move against Didi Global two days after its US$4.4bn IPO in the US on 30 June. Frankly, the surprising issue to GREED & fear is that Chinese companies are still listing in America when it has been evident for some time that the Chinese Government would prefer that they not do so,” Chris Wood, Global head (equity strategy), Jefferies said earlier this month. Chris Wood further highlighted American regulators are also forcing Chinese companies to delist unless they meet required auditing disclosure requirements.
On the other hand, ARK Investment Management, run by investor Cathie Wood has been trimming its stake in Chinese stocks, Bloomberg reported. The report said Wood’s flagship ARK Innovation ETF has cut China’s weight to less than 1% from 8% in February.