After Didi Global Inc (NYSE: DIDI) was removed from app stores by a Chinese regulator, the company’s shares plunged. The shares of the company fell to $10.90, which is around 30%. Because of that, the company suffered a whopping loss of over $22 billion.
Hardening its grip on sensitive online data & quoting security risks, China’s Cyberspace Administration barred new users from Didi’s app. In reply to the action taken by the Chinese Cyberspace Administration, Didi said that the move would affect it in China.
In a statement, the China State Council of China said that it would enhance data security regulations & laws, management of confidential information, & cross-border data flow. Moreover, it also stated that for overseas listings of Chinese companies, its surging revising & supervision rules.
Benjamin Zhan, Vice President & Portfolio Manager of Dynamic Funds, said that China’s broad strategy is to facilitate China’s companies to list domestically on Shanghai, Hong Kong, & Shenzhen exchanges.
Michael O’Rourke, the chief market strategist of Jones Trading, said that the tactics of the government of China are to keep its corporate leaders in check. However, he also said that China also wants corporations to invest in China more than in the United States.
Effect On Others
The plunging of shares of Didi also affected its partners that include Tencent Holdings Ltd. Tencent’s shares fell by 2.7% this week. In addition, Didi’s second-biggest holder, Uber Technologies Inc (NYSE: UBER), also witnessed a downfall. Uber’s shares fell by 1.6%. On Monday, the stock market of the United States was closed. Due to national security issues, Didi was asked by Chinese regulators to postpone its U.S. IPO.
In addition to Didi, Chinese regulators ordered Kanzhun Ltd. & Full Truck Alliance Co. to halt registrations of new users. Thanks to that, the shares of both the companies fell by 10%, & 19% respectively. Alibaba Group Holding Ltd. was also fined a whopping amount of $2.8 billion.