By Dhirendra Tripathi
Investing.com – ADRs of ride-hailing giant Didi Global (NYSE:DIDI) climbed more than 13% in Friday’s premarket after it revealed its plans to delist from the New York Stock Exchange, a move aimed at placating Chinese regulators.
"Following careful research, the company will immediately start delisting on the New York stock exchange and start preparations for listing in Hong Kong," Didi said on the Weibo (NASDAQ:WB) micro-blogging site, according to Reuters.
Didi listed on the NYSE on June 30, ignoring the advice of the authorities in China that it delay its public debut, pending scrutiny of its data handling practices. That didn’t go down well with the regulators in China, which then asked it to stop onboarding new users while also mandating online stores to take its apps off their platforms.
Barring a brief period, Didi stock has traded below its issue price of $14. The stock closed at $7.80 Thursday.
Didi did not explain its reasons for the plan but said it will hold a shareholder vote at an appropriate time and would ensure its NYSE-listed stock is convertible into tradable shares on another stock exchange.
According to Reuters, Didi is preparing to relaunch its apps in China by the end of the year, when it hopes that the cybersecurity investigation will be wrapped up. Authorities in China have kept a tight watch over their online firms given many of them are listed in the U.S. and have to share vital data on their users with the regulators there, a scenario they are not comfortable with. Didi's news comes a day after the Securities and Exchanges Commission published new rules for enforcing access to data held by U.S.-listed companies.
Many Chinese ADRs have fallen sharply since the signs of a looming split between the U.S. and Chinese capital markets started to appear. The companies may struggle to sustain their often high valuations without access to the world's largest pool of capital. U.S. investors, meanwhile, stand to be deprived of easy exposure to the world's fastest-growing large economy.