DiDi's Plans To Delist From NYSE Send Alibaba, Other Major Chinese Tech Names Sinking In Hong Kong

Alibaba Group Holding Limited BABA, JD.com Inc JD, Tencent Holdings Ltd TCEHY, Baidu Inc BIDU, and Xpeng Inc XPEV shares traded in the red in Hong Kong.

What’s Moving? Jack Ma-founded Alibaba’s shares fell 4.49% to HKD 117.10, while rival JD.com saw its shares decline 6.73% to HKD 319 after DiDi Global Inc DIDI said that its board of directors had authorized the company to initiate procedures to delist the company’s shares from the New York Stock Exchange.

“The Board has also authorized the Company to pursue a listing of its class A ordinary shares on the Main Board of the Hong Kong Stock Exchange,” said DiDi in its statement.

Shares of Chinese electric vehicle manufacturers and tech firms also traded in negative territory at press time. Xpeng plunged 8.4% to HKD 192, Tencent shares were down 2.96% at HKD 459.60, and Baidu dropped 3.46% to HKD 142.20.

The Hang Seng Index traded 0.49% lower at 23,672.60 at press time. On Thursday, the index had closed 0.55% higher.

Why Is It Moving? In July, the Cyberspace Administration of China ordered mobile app stores to remove 25 apps operated by DiDi shortly after the company conducted its U.S. IPO. The Chinese regulator also prohibited the company from onboarding new users.

This month it was reported that DiDi plans to finalize regulatory penalties by December and relaunch its ride-hailing and other apps in China by 2021.

Meanwhile, Alibaba, which is listed in the U.S. through a variable interest entity, could also face heat as China is looking to ban domestic companies seeking overseas listing through such a mechanism, as per a Bloomberg report. Alibaba went public in Hong Kong in November 2019.

Chen Weiheng, a partner at Wilson Sonsini told Hong Kong’s South China Morning Post newspaper that the “most sensible route for Didi should be to seek a Hong Kong listing first and then offer the conversion from ADSs to Hong Kong tradeable shares to US shareholders in the US [privatization] and delisting process.”

The head of research at global investment research firm Gavekal, Arthur Kroeber, said that China’s crackdown on internet platforms has created a “climate of uncertainty and fear.” He noted this would have a detrimental effect on the country’s private sector over time, reported South China Morning Post.

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