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4 Minute Read by NEW YORK/HONG KONG (Reuters) – In the first session since Chinese regulators ordered the company’s app to be taken down days after its $4.4 billion IPO on the New York Stock Exchange, Didi Global Inc shares plunged as much as 25% in early U.S. trading on Tuesday. The Cyberspace Administration of China (CAC) ordered the ride-hailing giant’s app to be deleted from Chinese app stores on Sunday in order to investigate its conclusions that the firm had illegally obtained customers’ personal data. The CAC launched cybersecurity probes into additional China-based companies on Monday, whose U.S.-listed parent companies’ shares had also fallen. Last week, Kanzhun Ltd and Full Truck Alliance were down 17.4% and 14.3%, respectively. Beijing said it would boost up oversight of Chinese companies listed offshore in order to crack down on illegal conduct and penalize fraudulent securities issuing, extending its actions beyond the tech sector. The stock of Chinese hip-hop event promoter Pop Culture Group, which is listed in the United States, has dropped 32%. Following the July 4th holiday, the US stock market was closed on Monday. Showcase ( 3 images ) Didi Global shares were last trading at $12.24, down 25.5 percent from their June 30 debut price of $16.65. Didi said on Monday that the app’s restriction would impact its earnings in China, despite the fact that existing customers may still use it. It also informed Reuters that previous to the IPO, it was unaware of the probe. However, the Wall Street Journal reported on Tuesday, citing sources, that the company had been advised by regulators to postpone its initial public offering (IPO) and conduct a security audit of its network. “With certain news sources claiming that Didi was aware of a crackdown months in advance, some individuals would begin to have issues about the company’s governance,” said Sumeet Singh, Aequitas Research director and Smartkarma contributor. “If the crackdown was planned months in advance, that means it isn’t going away very soon.” The IPO, which was the largest listing of a Chinese company in the United States since Alibaba raised $25 billion in 2014, offered Didi shares for $14 each. As of Friday, the corporation was valued at up to $75 billion. Showcase ( 3 images ) “Some investors may have taken comfort in the fact that the listing was approved by the government, when we now know it was not,” said Dave Wang, portfolio manager at Nuvest Capital in Singapore. Didi’s initial public offering (IPO) was not attended by Nuvest. According to market analysts, the news could have further repercussions. “In light of some of the recent news, investors need to be looking at not just valuations of the company based on global opportunities, but keeping in the back of their minds that policies could go into effect and how will that affect companies here in the (United States),” Matthew Keator, managing partner of the Keator Group, a wealth management firm in Lenox, Massachusetts, said. According to Peter Cardillo, chief market economist at Spartan Capital Securities in New York, the situation could have broader international ramifications. “It’s a backdoor way of getting even with the US without actually addressing the US,” Cardillo explained. “This crackdown paves the way for a possible economic confrontation.” “These things usually settle down fast, but this news could have a long-term detrimental impact.” Scott Murdoch in Hong Kong, Thyagaraju Adinarayan in London, and Tom Westbrook in Singapore contributed reporting; Divya Chowdhury in Mumbai and Caroline Valetkevitch and Stephen Culp in New York contributed additional reporting; and Sumeet Chatterjee, Jason Neely, and Kevin Liffey edited the piece./nRead More

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