• By The Financial District


Didi Global Inc. plunged Tuesday in U.S. trading as the ride-hailing company faced scrutiny over its data security and a broader Chinese crackdown on companies listing their shares abroad, Felipe Pacheco and Matt Turner reported for Bloomberg News.

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China’s State Council issued a sweeping warning to China’s biggest companies, vowing to tighten oversight of data security and overseas listings. That announcement followed the opening of a security review by China’s internet regulator last week and a demand for app stores to remove Didi.

Didi’s American depositary shares fell 20% to $12.49, wiping out about $15 billion of market value and taking the stock below the $14 price from its initial public offering. Beijing-based Didi controls almost the entire ride-hailing market in China and raised $4.4 billion last week in the second-largest US IPO for a Chinese firm.

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The State Council’s broadside marked an escalation in President Xi Jinping’s campaign to bring the nation’s technology firms -- and their reams of valuable data -- under control.

Over the weekend, China also moved against two other companies that also recently listed in New York -- Full Truck Alliance Co. and Kanzhun Ltd., Ltd. The crackdown has knocked about $42 billion off the market value of firms listed on the Nasdaq’s Golden Dragon China Index, which tracks Chinese ADRs, since the government derailed the planned Ant IPO in November.

Further moves included a record $2.8 billion fine levied against Alibaba after an antitrust probe found it had abused its market dominance, sparking concern about the future of the sector.

The warning “is aimed at securities violations, but it also makes special provisions for cross-border data supervision, which signals that data supervision has become one of the most important regulatory fields in China,” said Xia Hailong, a lawyer at the Shanghai-based Shenlun law firm.

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“Since there is no mechanism in place for cross-border supervision of securities, conducting a security review on data could serve as an effective tool for Chinese regulators to rein in overseas listed companies,” he said. The Didi probe stunned investors and industry executives, hammering the Hong Kong shares of peers from Tencent Holdings Ltd. -- one of Didi’s largest backers -- to Alibaba Group Holding Ltd. and Meituan.

Investors worry that the latest security-based probes have opened a new front in Xi’s broader campaign against China’s internet giants that began in November with the collapse of Ant Group Co.’s $35 billion IPO and subsequent antitrust investigations into Alibaba and Meituan.


Happyornot makes feedback terminals measuring customer satisfaction sing smiley-face buttons.
Happyornot makes feedback terminals measuring customer satisfaction sing smiley-face buttons.