BEIJING (AP) — China's dominant ride-hailing service, Didi Global Inc., said Friday it will pull out of the New York Stock Exchange and shift its share trading to Hong Kong as the ruling Communist Party tightens control over tech industries.
Didi gave no explanation, but China's leaders increasingly fret about who controls information gathered about its public by e-commerce, ride-hailing and other tech companies. Beijing sees that as a valuable asset and security risk.
Regulators said in July they would step up scrutiny of tech companies with shares traded abroad and their information security and cross-border data flows. Didi’s share price fell 25% after regulators launched an investigation into its handling of customer data following its June 30 stock market debut.
“After conscientious research, the company will start delisting operations on the New York Stock Exchange immediately and commence preparations to list in Hong Kong,” Didi said on its social media account. A separate statement said U.S. shares would be converted into “freely tradable shares” on another “internationally recognized" exchange.
Hong Kong is Chinese territory but has a separate regulatory system that allows foreigners to invest in its stock market. Mainland markets are mostly off-limits to foreign capital.
Tech entrepreneurs who are largely shut out of the state-run financial system have raised billions of dollars abroad. But the ruling party worries about how that affects control of their companies. It is promising more access to capital within China.
Didi Chuxing raised about $4.4 billion in its market debut. The company earlier denied a news report it planned to buy back its U.S. shares.
Other companies including Alibaba Group, the world’s biggest e-commerce company, and Tencent Holding, which operates the popular WeChat message service, also have been hit by data security and anti-monopoly probes.
Investor jitters about the crackdown have knocked more than $1 trillion off the total market value of Chinese tech companies on U.S. and other foreign exchanges.
Didi was founded in 2012 by Alibaba veteran Will Wei Cheng. Its president is Jean Qing Liu, a former Goldman Sachs managing director and the daughter of Liu Chuanzhi, founder of computer maker Lenovo Group.
It expanded abroad in 2018 by acquiring Brazil’s 99 Taxis and set up operations in Mexico. Didi operates in 16 countries, though almost 90% of the 493 million customers who used the service at least once in the past year are in China.
Didi acquired rival Kuaidi in 2016 and Uber Technologies Inc.’s China operation the following year. Other competitors in the $50 billion-a-year market include Caocao Chuxing, a unit of automaker Geely, and Hello Chuxing, backed by Alibaba.
Following its investigation, China’s cyberspace regulator said in July “serious violations” were found in how Didi collected and stored personal information. Didi was later ordered to remove 25 of its apps from online stores.
Chinese companies have sold shares abroad for two decades but regulators have yet to say whether their financial structures comply with rules that ban foreign ownership of internet companies and limit access to other industries.
The ruling party is trying to capture more of their value for the Chinese public by encouraging companies to sell shares on domestic markets.
Shares in a handful of mainland companies traded in Hong Kong can be bought by Chinese investors through mainland exchanges. Meanwhile, a stock exchange set up to serve entrepreneurs started trading Nov. 15 in Beijing.