Didi plunges as China escalates corporate clamp

Didi Global opened nearly 25 percent lower in New York after China ordered the removal of the company's platform from app stores, days after a US$4.4 billion (HK$34.1 billion) initial public offering in the United States.

Shares of the Chinese ride-hailing giant had fallen as much as 30 percent in premarket trading to US$10.90, wiping out about US$22 billion in market value and taking the stock below its US$14 IPO price.

It was trading at around US$11.7 at 9.30pm.

This came as China issued a sweeping warning to its biggest companies, vowing to tighten oversight of data security and overseas listings just days after Didi's contentious decision to go public in the US.

While the statement from China's State Council yesterday was thin on details, it suggests Beijing is preparing to intensify a crackdown on its corporate sector that has spanned everything from property debt and fintech to antitrust issues and now cybersecurity.

Rules for overseas listings will be revised, the council said, while publicly-traded firms will be held accountable for keeping their data secure. It also said it will step up its regulatory oversight of companies trading in offshore markets.

The latest statement marks an escalation in President Xi Jinping's campaign to bring the nation's technology firms - and their reams of valuable data - under control.

"This is consistent with China's broad strategy to encourage Chinese companies to list domestically on the Hong Kong, Shanghai and Shenzhen exchanges," said Benjamin Zhan, vice president and portfolio manager at Dynamic Funds.

A crackdown on the nation's big tech names has knocked about US$42 billion off the market value of firms listed on the Nasdaq's Golden Dragon China Index, which tracks Chinese ADRs, since the government derailed the planned IPO of giant Ant Group in November. Further moves included a record 18.2 billion yuan (HK$21.86 billion) fine on Alibaba (9988) after an antitrust probe found it had abused its market dominance, sparking concern about the sector's future.

"The Chinese government's tactics appear to have the twin purposes of keeping its corporate leaders in check while also making sure the investor pain lands primarily in the US more so than China," said Michael O'Rourke, chief market strategist at JonesTrading.

While Didi's half-billion existing users will still be able to order rides for now, China's cybersecurity crackdown adds to the uncertainty surrounding all the nation's internet companies.

Tencent (0700), which has a stake in Didi, is down 2.7 percent so far this week after falling 3.6 percent Monday and partially trimming losses yesterday.

The onslaught of government announcements began on Friday after markets in Asia closed.

Chinese regulators asked Didi as early as three months ago to delay its landmark US IPO because of national security concerns involving its huge trove of data, according to people familiar with the matter.