Stock Groups

Didi Soars on Speculation of Favorable NYSE Delisting Terms -Breaking


© Reuters

By Dhirendra Tripathi

Investing.com – ADRs of ride-hailing giant Didi Global (NYSE:) climbed more than 13% in Friday’s premarket after it revealed its plans to delist from the New York Stock Exchange, a move aimed at placating Chinese regulators.

Didi, a microblogging website called Weibo, stated, “Following careful analysis, the company immediately starts delisting at the New York Stock Exchange and begins preparations to list in Hong Kong.”

Didi, which was not in compliance with Chinese regulations, listed its shares on the NYSE at 30 June. It ignored the warnings of authorities that it should delay its public debut to allow for scrutiny into its data handling. That didn’t go down well with the regulators in China, which then asked it to stop onboarding new users while also mandating online stores to take its apps off their platforms.

Didi stock is trading below the $14 issue price, barring a very brief time. Stock closed Thursday at $7.80

Didi was vague about the reason for this plan. However, Didi stated it would have a shareholder vote and ensure that its NYSE listed stock can be converted into tradable shares via another stock exchange.

According to Reuters Didi will relaunch its apps to China in the new year. It hopes the cybercrime investigation will be closed by then. China’s authorities have been keeping a close eye on the online businesses of many, which are often listed in the U.S. They must share sensitive data about their users with regulators in China. This is a situation they do not like.  Didi’s announcement comes just days after the Securities and Exchanges Commission released new rules to enforce access to U.S.-listed businesses’ data.

Since signs began to emerge of an impending split between China and the U.S. capital markets, many Chinese ADRs fell sharply. Without access to capital, the companies might struggle to maintain their high valuations. U.S. investors will be denied easy access to the fastest-growing large economic sector in the world.  

 

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.