DiDi Delists From US Amid China's Tech Crackdown and Political Tensions
Chinese tech giant DiDi has delisted from the US, marking a significant shift in the relationship between Chinese companies and US markets. This move follows Beijing's crackdown on big tech and tighter data controls, as well as rising political tensions. Meanwhile, Chinese companies are exploring alternative routes for initial public offerings (IPOs), with Hong Kong emerging as a popular destination.
DiDi's delisting comes amidst a broader trend of Chinese companies adopting a 'wait and see' approach to US IPOs due to escalating political tensions and regulatory hurdles. The Holding Foreign Companies Accountable Act has put many US-listed Chinese companies at risk of delisting due to auditor non-compliance. However, after a yearlong dry spell, Chinese companies are slowly returning to the US for IPOs. This year, 17 Chinese companies have raised a total of USD 405 million in US IPOs, nearing last year's total.
In recent years, major Chinese companies like Zijin Gold International, Hesai Group, Chery, and Kingsoft Cloud have conducted successful IPOs in Hong Kong. This reflects a strong return of Chinese firms to the Hong Kong market, driven by changing investor perceptions and regulatory contexts. China's new rules, requiring companies seeking overseas listings to obtain permission from the China Securities Regulatory Commission, have also contributed to this trend.
The average return from offer for Chinese US IPOs this year is negative 11%, reflecting ongoing regulatory challenges. Historically, Chinese US IPOs between 2018 and 2022 have averaged a negative 65% return from offer, compared to minus 23% for all IPOs and minus 16% for non-Chinese issuers. As China requires companies with more than 1 million users to undergo a cybersecurity review before overseas listings, the regulatory landscape remains complex. Despite these challenges, Chinese companies continue to seek global listings, with Hong Kong currently serving as a popular alternative to the US.
