Didi to delist from NYSE less than 6 months after going public

CNBC's Eunice Yoon joins 'Squawk Box' to report on Chinese ride-hailing firm Didi's plans to delist from the New York Stock Exchange. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi 

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

It comes less than six months after the tech giant listed in the U.S. Didi said it reached that decision after careful consideration.

Shares of Didi have plunged 44% since its IPO on June 30, and closed at $7.80 on Thursday.

The stock fell sharply last week after reports that Chinese regulators have asked the firm’s executives to formulate a plan to delist from the U.S. Regulators reportedly want Chinese ride-hailing giant Didi to delist from the New York Stock Exchange because of concerns about leakage of sensitive data.

The delisting jeopardizes the massive stakes held by SoftBank and Uber, which combined own over 30% of Didi, according to FactSet. SoftBank shares in Japan were down 2.5% on Friday.

Didi reportedly drew the ire of regulators when it pushed ahead with an IPO without resolving outstanding cybersecurity issues that the authorities wanted solved. Didi is China’s largest ride-hailing app and holds lots of data on travel routes and users.

“I think China has made it clear they no longer want technology companies listing over in U.S. markets, because it brings them under the jurisdiction of U.S. regulators,” Aaron Costello, regional head of Asia at Cambridge Associates, said Friday after the news broke.

“So our view has been that almost all of these U.S.-listed tech companies will relist either Hong Kong or the mainland,” he told CNBC’s “Street Signs Asia.”

When contacted by CNBC on Didi’s planned listing in Hong Kong, the Hong Kong Exchange said it does not comment on individual companies.

China has cracked down on its tech giants in the past year. Ant Group’s IPO was suspended late last year, while regulators introduced a slew of new rules in areas from antitrust for internet platforms and a bolstered data protection law. Both e-commerce giant Alibaba and food delivery firm Meituan have also faced antitrust fines.

Didi’s announcement comes less than 24 hours after the U.S. Securities and Exchange Commission finalized rules that allow it to delist foreign stocks for failing to meet audit requirements.

The rules will let it implement the U.S. Holding Foreign Companies Accountable Act, which was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board, which was created in 2002 to oversee the audits of public companies.

Costello told CNBC he expects all the U.S.-listed Chinese tech companies to continue moving their primary listings to Hong Kong.

“This is actually part of the Chinese government’s plan — that they’re no longer comfortable with the U.S. as a jurisdiction for Chinese tech companies because of the regulatory scrutiny that U.S. put on them, and for the data security issues,” he said.

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