HONG KONG, China — Didi Global’s shares dropped over 20% on Tuesday as the stock market in the United States priced in the impact of China’s latest crackdown on technology businesses, which has targeted the country’s most popular ride-hailing service. The New York-listed company began trading at $11.78, significantly below its IPO price of $14 last week, before trimming its losses to settle at $12.49. Its market capitalization has dropped to roughly $60 billion, down from around $74 billion on Friday. The drop occurred when U.S. markets reopened following the July 4 holiday, allowing investors to trade on the latest regulatory news from Beijing. After deciding that Didi had illegally handled customers’ personal data, China’s Cyberspace Administration (CAC) ordered smartphone app retailers to stop distributing the company’s service on Sunday. Other Chinese stocks that are traded in the United States have also withered as a result of the authorities’ increased scrutiny. After the CAC cited both firms Monday, ordering them to cease new user registrations, Kanzhun, the operator of online recruitment app Boss Zhipin, and logistics company Full Truck Alliance — both of which listed last month in the United States — both closed substantially lower Tuesday. Kanzhun was down about 16%, while Full Truck Alliance was down more than 6%. The assault on companies that recently went public in the United States comes amid a geopolitical battle between Beijing and Washington over technology. The CAC inquiry will harm the three companies’ revenues and profits, as they are heavily reliant on the Chinese market. “It’s a significant warning flag for investors, since no Chinese firm appears to be immune to Chinese regulatory scrutiny,” said Zennon Kapron, managing director of Singapore-based consultancy Kapronasia. “This was a risk that could have been overlooked in the past, but not any longer.” It might also hamper China’s push to list in the United States, despite the fact that LinkDoc Technology, a medical data business backed by Alibaba Health Information Technology, is on pace to raise up to $210 million in an IPO slated to price on Thursday. According to a source close to the deal, the offering has sparked “investor interest.” According to statistics from research firm Dealogic, 34 Chinese businesses raised $12.4 billion in New York floats in the first half of 2021, compared to 18 listings that garnered $2.8 billion in the same period last year. Price of a share “Performance does important,” according to one IPO banker in Hong Kong. “The opening of the shares will have an impact on the pipeline in the near future. In a climate where U.S.-listed Chinese companies are being targeted, common logic dictates that the IPO flow will begin to shift to Hong Kong.” The CAC’s investigations are part of a months-long campaign by Chinese regulators on technology businesses. Authorities have looked into antitrust violations, data security, and privacy concerns in an attempt to rein in technology companies’ and their wealthy founders’ rising power. Alibaba Group Holding and its financial partner Ant Group have been at the forefront of the crackdown. Last November, officials tightened regulations on Ant’s lending operations, preventing it from launching what was believed to be the world’s largest IPO. Meanwhile, Alibaba was fined a record 18.2 billion yuan ($2.75 billion) for anti-competitive acts in April. More than 30 other Chinese enterprises, including food delivery service Meituan, internet giant Tencent, and online retailer JD.com, have been subjected to increased regulatory scrutiny./n
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