Didi Global Inc. plunged into U.S. business on Tuesday when the retail company was scrutinized for its data security and severe Chinese crackdown on listed companies abroad.
China’s State Council has issued a comprehensive warning to major Chinese companies, promising to strengthen data management and list security abroad. The announcement follows the start of a security check by China’s network regulator last week and a request from software stores to remove Didi.
Shares of the US Didi defender fell 25% to $ 11.58, clearing nearly $ 22 billion from market value and pushing stocks below the $ 14 price of its first public edition. The Beijing-based Didi controls almost the entire Chinese distribution market and collected $ 4.4 billion last week in China’s second-largest IPO company.
The State Council’s outrage signaled the escalation of President Xi Jinping’s campaign to integrate the country’s technology companies – and their number of important data. Over the weekend, China also picked up two other recently listed companies in New York, Full Truck Alliance Co and Kanzhun Ltd., Ltd.
The warning “targets security breaches, but also contains special provisions for border data monitoring, indicating that data monitoring has become one of the most important regulatory areas in China,” Xia Hailong, a lawyer for Shanghai law firm based in Shenlun.
“Since there is no border security management system in place, conducting data security audits can be used as an effective tool for Chinese regulators to block listed companies abroad,” he announced.
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Didi’s investigation shocked investors and industry executives, sharing the Hong Kong shares of their counterparts at Tencent Holdings Ltd. – one of Didi’s major donors – to Alibaba Group Holding Ltd. and Meituan. Investors fear a recent security-based investigation has opened a new chapter in Xi’s broader campaign against major Chinese internet companies that began in November with a $ 35 billion IPO collapse. Ant Group Co. dollar
The crackdown has led to the market value of companies listed on China’s Gold Gold Nasdaq index, which monitors Chinese ADRs, to fall by nearly $ 42 billion since the government removed the Ants IPO. Other measures include a $ 2.8 billion record fine imposed on Alibaba after a forensic investigation found that it had misused its high market position, raising concerns about the industry’s future.
“The Chinese government’s approach seems to have a dual purpose in controlling its corporate executives while ensuring that investor pain affects America more than China,” said Michael O’Rourke, chief strategist. JonesTrading Markets.
Meanwhile, shares of Weibo Corp. escalated after Reuters reported that the company’s chairman and public investor were in talks to make China’s Twitter service more private. Weibo later denied holding any privatization talks, and the stock reduced its revenue. But the timing of the report sparked rumors that some Chinese companies were already looking for alternatives to list in the US market.
Three months ago, Chinese regulators asked Didi to delay his IPO in the United States over national security concerns over its huge data mine, according to people familiar with the matter. Earlier, Chinese non-monopoly observers ordered Didi to end such practices, as well as arbitrary price increases and mistreatment of drivers.
While the existing Didi half-billion users will still be able to import vegetables at the moment, China’s crackdown on cyber security increases the uncertainty surrounding all internet companies in the country. Tencent Holdings Ltd., which owns shares in Didi, is down 2.7% from the start of the week, after slipping 3.6% on Monday and reducing losses Tuesday tonHong Kong. The government’s advertising campaign began on Friday after Asian markets closed.
A full truck with Kanzhun fell 17% and 15%, the controller. Like Didi, the two have been ordered from Beijing to suspend new consumer registration. Meanwhile, Uber Technologies Inc, Didi’s second largest owner, fell 2.2%.
Anti-monopoly control of the country, an investigation was revealed since last Friday from a powerful network controller. Although it has no legal authority over floating abroad, ACC has a great deal of freedom to investigate and enforce laws regarding the impact of national data security on which Didi and other major programs recover. This power stems from Beijing’s main goal of ensuring that it controls access to this data – which, like oil, is now designated as a national resource – and prevents one private company from being strong enough to challenge its authority.
Feel the burn
Chinese companies listed in the United States this year are falling into repression against Didi