Didi says it’s delisting from the New York Inventory Alternate and getting ready to be listed in Hong Kong

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A mobile phone shows the interface of Didi’s APP in Yichang, Hubei province, China, July 4, 2021.

Cost photo | Barcroft Media | Getty Images

Chinese ride-hailing giant Didi said Friday it will begin delisting from the New York Stock Exchange and instead make plans to list in Hong Kong.

Didi said this decision was made after careful consideration.

Didi’s shares slumped last week after reports from Chinese regulators asked the company’s executives to formulate a delisting plan from US regulators.

The tech giant was first listed in the US less than six months ago. Shares are down 44% since the company’s IPO on June 30, closing at $ 7.80 on Thursday.

The delisting endangers the massive shares of SoftBank and Uber, which according to FactSet together own more than 30% in Didi. SoftBank stocks in Japan were down 2.5% on Friday.

Didi reportedly drew the wrath of regulators when it pushed an IPO without addressing overt cybersecurity issues that authorities wanted to resolve. Didi is China’s largest ride hailing app and contains a lot of data about travel routes and users.

“I think China has made it clear that it no longer wants technology companies to be listed in US markets because it puts them under the jurisdiction of US regulators,” said Aaron Costello, regional director for Asia at Cambridge Associates, on Friday after the news became known.

“So our view was that almost all of these US-listed technology companies would either put Hong Kong or the mainland back on the list,” he told CNBC’s Street Signs Asia.

In response to a request from CNBC regarding Didi’s proposed listing in Hong Kong, the Hong Kong Stock Exchange said it would not comment on individual companies.

China cracked down on its tech giants over the past year. The Ant Group IPO was suspended late last year while regulators introduced a number of new rules in areas such as antitrust law for internet platforms and a strengthened data protection law. Both the e-commerce giant Alibaba and the grocery delivery company Meituan faced antitrust fines.

Didi’s announcement comes less than 24 hours after the US Securities and Exchange Commission established rules that allow it to remove foreign stocks from the list for failing to meet exam requirements.

With the rules, it can implement the U.S. Holding Foreign Companies Accountable Act, which was passed in 2020 after Chinese regulators repeatedly rejected requests from the Public Company Accounting Oversight Board, created in 2002, to oversee public company audits.

Costello told CNBC he expected all US-listed Chinese tech companies to continue moving their primary listings to Hong Kong.

“This is actually part of the Chinese government’s plan – to make them uncomfortable with the US as a jurisdiction for Chinese tech companies because of US regulatory scrutiny and data security issues,” he said.

– CNBC’s Arjun Kharpal, Ari Levy, contributed to this report.

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