Didi Global's plan to withdraw from the New York stock exchange may create an even deeper chill after this year's drop-off in Chinese firms' listings in the world's most liquid market, bankers and advisers said.
"It will now set a precedent for other US-listed companies, especially those with data concerns," said Justin Tang, head of Asian Research at United First Partners, Singapore.
Didi fell over 22 percent at its weakest on Friday, extending the ride-hailing giant's slump to more than 50 percent below its US$14 (HK$109.20) initial public offering price. US-listed Chinese firms also fell sharply in Hong Kong. Alibaba (9988) fell 8.2 percent, Baidu (9888) dropped 7.8 percent and JD.com (9618) shed 7.7 percent.
Didi's board has authorized the company to file for a delisting of its American depositary shares from the New York Stock Exchange, it said.
It will pursue a listing in Hong Kong and ensure that the US stock will be convertible into freely tradable shares on another internationally recognized stock exchange.
"We're only going to see limited IPOs out of China into the US now," one Hong Kong banker told Reuters, as the city's financial sector digested the impact the Didi decision would have on the listing pipeline.
A brutal 2021 selloff for Chinese stocks trading in the US has now erased more than US$1 trillion in value since February and shows no signs of easing amid regulatory pressure on both sides of the globe, according to a Bloomberg report.
Meanwhile, Chinese firms that list on US stock exchanges must disclose whether they are owned or controlled by a government entity, and provide evidence of their auditing inspections, the US Securities and Exchange Commission said. China and Hong Kong are the only two jurisdictions that refuse to allow the inspections despite Washington requiring them since 2002.
However, Hong Kong's Secretary for Financial Services and the Treasury Christopher Hui Ching-yu has denied claims that the city along with China does not cooperate with regulators in the US.
He said that Hong Kong has allowed the US's Public Company Accounting Oversight Board access to local auditors and their working papers, citing past examples.
"We urge the US SEC to correct its misleading statement," said Hui.
