Political pressure on Chinese companies creates a unique situation
The end of the honeymoon between "Wall Street" and Chinese technology companies
Didi Chuqing is considered the "Chinese Uber".
AFP
Didi Chuqing will not be the last giant Chinese group to leave the New York Stock Exchange.
AFP
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The announcement by Didi Chuqing Group, which considers China's Uber, to withdraw from the New York Stock Exchange, brings down the cordial relationship between Wall Street and Chinese technology groups, which are besieged by the authorities in Beijing and regulators in the United States.
Only five months passed between Didi's listing in New York in June, and its announcement on Friday that it was preparing to list it on the Hong Kong Stock Exchange.
During this period, its market value declined by 63%.
Didi's move comes in the wake of a massive campaign carried out by the Chinese regulator, in which it cut the wings of major Internet companies that have the most impact on consumers, including "Ali Baba" and "Tencent".
After Friday's announcement, the shares of Chinese online retail companies that are traded on the New York Stock Exchange such as "Ali Baba", "JD.com" and "Bandiodio", fell significantly.
Shares of Alibaba - whose arrival on Wall Street in 2014 prompted many Chinese companies to list in New York - fell to their lowest level in five years, while rumors circulated that Alibaba might leave the New York Stock Exchange after Didi. .
In practice, holders of Didi Chuqing on the New York Stock Exchange can hold the shares even after they move to Hong Kong, so their investment will not simply disappear.
“People are very scared of (the new) rules and the Chinese government... and that really affected the confidence of (investors)," said EMQQ's portfolio manager, Kevin Carter.
People are afraid.”
Meanwhile, the financial market regulators in the United States announced, on Thursday, the adoption of a rule that allows for the delisting of foreign companies from the stock exchange if they fail to provide data to the auditors.
The move mainly targets Chinese companies, and requires them to disclose whether they are "owned or controlled" by the government.
"While more than 50 jurisdictions have made efforts to allow required inspections, two regions, Hong Kong and China, have not in their history," said Gary Gensler, president of the US Securities and Exchange Commission.
sensitive data
The Global Times, a newspaper close to the Chinese Communist Party, criticized the new US law in an opinion piece on Friday.
“If the United States imposes unequal conditions on national security in the context of competition between the two countries, by requiring listed Chinese companies to submit audits for auditing, in order to spy on China’s internal situation, and store huge amounts of sensitive data,” she said in the article, which was published without signature. What is in the possession of Chinese companies, China will not accept that.”
It is reported that most of these shares listed on the New York Stock Exchange are owned by institutions, not citizens.
"Some funds can have shares that are traded only in the US markets," said Grigory Volokin, head of the Mischart financial services group.
"This is what puts pressure on stocks," he added.
For many market watchers, Didi will not be the last Chinese giant to leave the New York Stock Exchange.
"It's not just Didi," Volokin said. "For months we've watched the Communist Party consolidate its grip on companies."
Shortly after Didi went public in New York, China's cyber security watchdog launched an investigation into the reservation platform Full Track Alliance and the job search site Kangwon.
The Chinese government has also tightened rules for companies that provide private education services to families.
This caused damage to companies listed in New York.
According to US government figures dating back to May, there are 248 Chinese companies listed in the United States, with a combined market capitalization of $2.1 trillion.
“After an active start to the year, most Chinese companies have stopped entering the US capital markets since June, due to the regulatory and political hurdles in the two countries,” said Matthew Kennedy, strategist at Renaissance Capital.
This week, the large Chinese online education company Spark Education backed away from its plan to go public in the United States.
“The way things look, it can be said that there will be no Chinese IPOs, while the pending ones will be withdrawn one by one,” Volokin said.
According to "Renaissance Capital", there are 35 companies waiting for their turn in the public offering.
By leaving the US market, Chinese companies are abandoning an investment base unparalleled in the world, with $52.5 trillion in assets under management, compared to $7.1 trillion in China, according to a study conducted by McKinsey & Company, a consultancy.
Carter stated that this political pressure on Chinese companies creates a unique situation, as the most important companies in the Chinese technology world collapse in the stock markets, but for reasons that have nothing to do with their revenue reports. "These companies are still making profits, and these profits are still growing," Carter said.
"Revenue growth for the current year exceeds 30%.
Not for every company, but rather collectively.
No matter where the shares are and where they are traded, the situation remains that way.”
• US government figures dating back to May indicate that there are 248 Chinese companies listed in the United States, with a total market value of $2.1 trillion.
• Alibaba shares - whose arrival on Wall Street in 2014 prompted many Chinese companies to list their shares in New York - to their lowest level in five years, while rumors circulated that Alibaba might leave the New York Stock Exchange after Didi ».
• By leaving the US market, Chinese companies are abandoning an investment base unparalleled in the world, with $52.5 trillion in assets under management, compared to $7.1 trillion in China, according to a study conducted by McKinsey & Company, a consultancy.
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