Didi Global Inc (滴滴) shares fell for a third consecutive day on Wednesday in New York trading, hitting fresh lows, as China was said to consider closing a loophole used by firms listing their shares abroad.
The ride-hailing company fell 4.6 percent to close at US$11.91.
The US depositary shares slumped 20 percent in Tuesday’s session, and now trade 15 percent lower than its US$14 initial public offering price.
Photo: Reuters
Didi’s offering was the second-largest US listing for a Chinese firm on record. The company has lost more than US$17 billion in market value this week, including about US$15 billion on Tuesday alone.
“The Chinese government has made it very clear that they act in what they believe to be their own best interests,” Interactive Brokers chief strategist Steve Sosnick said. “This doesn’t rule out the idea that one could or should invest in China, it just changes the risk premium that is required.”
Regulators in Beijing are planning rule changes that would allow them to block a Chinese company from listing abroad even if the unit selling shares is incorporated outside China, shutting off a route long-used by Chinese technology giants, people familiar with the matter said.
The China Securities Regulatory Commission is leading efforts to revise rules on overseas listings that have been in effect since 1994, said the people, asking not to be identified discussing a private matter.
The proposed changes, which are subject to approval by the Chinese State Council, could also affect companies that have already gone public using the so-called variable interest entity model, the people said.
In another blow to the stock, two US shareholder lawsuits were filed in US federal courts in New York and Los Angeles on Tuesday.
The suits claim that the company failed to disclose ongoing talks it was having with Chinese authorities about its compliance with cybersecurity laws and regulations.
Several Didi executives and directors, including CEO Cheng Wei (程維), as well as lead underwriters Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co were named as defendants.
Didi, Goldman Sachs, Morgan Stanley and JPMorgan did not respond to requests for comment.
China on Tuesday issued a sweeping warning to some of its biggest companies, vowing to tighten oversight of data security and overseas listings.
That put further selling pressure on China’s biggest technology names, including Alibaba Group Holding Ltd (阿里巴巴) and Baidu Inc (百度), which have both closed lower for five straight days.
A gauge of Chinese tech stocks traded in Hong Kong fell as much as 1.9 percent on Wednesday to approach its lowest level since November last year.
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