Expect more Chinese companies to shelve planned listings and for many others to remove them from consideration.įor all the billions of lost investment capital this could bring over the short term, the larger cost is one that could be measured in trillions of dollars of endangered potential as Xi consistently backs away from the market liberalizations he once appeared to champion. On that same day, Chinese medical data firm LinkDoc became the first Chinese company to ditch its IPO after the Didi news. The latest came on Thursday, when The Wall Street Journal reported that the Cyberspace Administration of China, which reports to Xi, would police all overseas market listings.
#SOURCES DIDI KEEP LINKDOC US SERIES#
The more serious matter is the wider chilling effect, coming in the context of a series of stalled or reversed Chinese economic and marketization reforms. If that's as far as the downside goes and if the regulatory retaliation against Didi stops where it is, this week could still be dubbed a win by Didi executives. The cost to investors by Friday was a drop to only 67% of the stock's original value. markets, and the continual expanding of fronts in the U.S.-Chinese contest. Still, Didi's shares rose 16% on the second day of trading, setting the company's market value at nearly $80 billion.īut by July 2, Chinese regulators put Didi under cybersecurity review, banned it from accepting new users, and then, in the next days, went even further by instructing app stores to stop offering Didi's app.Ĭredit all of that to a mixture of increasingly authoritarian politics, regulatory concerns over data privacy and U.S. They went further by instructing their employees not to call attention to the event on social networks. Not only did company officials resist the usual routine of ringing the opening bell. One early hint of trouble was that the company played down the blockbuster listing. The facts are that Didi Global began trading on the New York Stock Exchange on June 30, auspiciously one day ahead of the CCP centennial celebration. It is now more likely to be Chinese regulators themselves who plug the spigot. Until this week, the greatest concern for investors was that new US accounting rules would stymie that flow. Dealogic shows that Chinese companies have raised $26 billion from new U.S. The ripples could be long-lasting and far-reaching for the lucrative relations between China and Wall Street. initial public offering (IPO) of the world's largest ride-hailing and food delivery service, Didi. The story that triggered this week's stir was the $4.4 billion U.S. investors shouldn't be trusting their futures to China Inc." "Wall Street must now acknowledge that the risk of investing in these companies can't be known, much less disclosed," writes Josh Rogin in the Washington Post. Foreign investors, only too happy to accept risk for the long-proven upside of Chinese stocks, now must factor in a growing risk premium as Xi tightens the screws. What is clear is that Chinese President Xi Jinping, during this month's celebration of the one hundredth anniversary of the CCP, has sent an unmistakable message at home and abroad of who is in charge.Ĭhinese domestic companies, particularly of the tech and data-rich variety, will be more likely to shun Western capital markets and adhere to party preferences. Graph courtesy of the Rhodium Group and Atlantic Council GeoEconomics Center's China Pathfinder Project
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