March 29, 2023

Dubai Week

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The withdrawal of "Chinese Uber" from the stock market predicts the end of the honeymoon between Wall Street and Beijing.

The withdrawal of “Chinese Uber” from the stock market predicts the end of the honeymoon between Wall Street and Beijing.

DD Chucking’s announcement that China’s Uber will withdraw from the New York Stock Exchange eases ties between Wall Street and Chinese technology groups besieged by authorities in Beijing and regulators in the United States.

Only five months have passed between Didi’s listing in New York in June and its announcement on Friday that it was preparing to list on the Hong Kong Stock Exchange. During this period, its market value declined by 63 percent.

Didi’s action comes in the wake of a massive campaign by a Chinese regulator to cut off the wings of major Internet companies that have a greater impact on consumers, including “Ali Baba” and “Tencent”.

Following Friday’s announcement, shares of Chinese online retailers “Ali Baba”, “” and “Bendiodio” traded lower on the New York Stock Exchange.

Shares of “Alibaba” fell – whose access Wall Street 2014 saw several Chinese companies listed in New York – less than five years after rumors spread that they might leave the New York Stock Exchange after Alibaba didi.

In practice, NYSE Didi Suking shareholders can still hold shares even after moving to Hong Kong, so their investment simply does not disappear.

“People are very scared of the (new) rules and the Chinese government … and it (really hurt investor confidence. People are scared, ‘” said Kevin Carter, EMQQ’s portfolio manager.

Meanwhile, financial market regulators in the United States announced on Thursday that they would adopt a rule that would allow foreign companies to be removed from the stock market if they fail to provide data to auditors.

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The move mainly targets Chinese companies and should disclose whether they are “owned or controlled” by the government.

“More than 50 jurisdictions have been attempted … to allow for the necessary research, the two regions of Hong Kong and China are not in their history,” said Gary Jensler, chairman of the U.S. Securities and Exchange Commission.

“Sensitivity data”

The Global Times, a newspaper close to the Chinese Communist Party, criticized the new U.S. law in a commentary on Friday.

“If the United States imposes unequal conditions on national security in the context of competition between the two countries, listed Chinese companies must submit audits to spy on China’s internal situation and store large amounts of sensitive data in the possession of companies. In an article published without signature, China, China will not agree.

It has been reported that most of these shares listed on the New York Stock Exchange are owned by companies, not citizens.

“Some funds can only hold shares that are traded on US markets,” said Gregory Vologn, chairman of the Financial Services Group. “This is what puts pressure on stocks,” he said.

To many market observers, Didi will not be the last Chinese company to leave the New York Stock Exchange.

“This is not just Didi, we have been seeing for months the Communist Party strengthen its grip on institutions,” Vologin said.

Shortly after Didi listed his stake in New York, China’s cybersecurity watchdog launched an investigation into booking site Full Track Alliance and job search site Kangwon.

The Chinese government has also tightened rules for companies that provide private education services to families. Recent damage to companies listed in New York.

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As of pre-May US government figures, there are 248 Chinese companies listed in the United States, with a market value of $ 2.1 trillion.

“Since the start of the year, most Chinese companies have stopped entering US capital markets since June due to regulatory and political sanctions in both countries,” said Matthew Kennedy, a strategist for Renaissance Capital.

This week, the largest Chinese online education company, Spark Education, withdrew from its plans to go public in the United States.

“As things stand, it can be said that there will be no Chinese IPOs and the pending ones will be withdrawn one by one,” Vologin said. According to Renaissance Capital, 35 companies are waiting for their IPO.

By leaving the market AmericanAccording to McKinsey & Company, Chinese companies with $ 52.5 trillion in assets under management are abandoning the world’s unparalleled investment base, compared to $ 7.1 trillion in China.

Carter said this political pressure on Chinese companies creates a unique situation where the most important companies in the Chinese tech world fall into stock markets, but have nothing to do with their earnings statements.

“These companies are still making a profit. And these profits are still growing,” he said.

“Revenue growth for the current year has exceeded 30 per cent. Not for every company, but collectively. Wherever the shares are traded, the situation remains the same,” he added.