Sinks on DD Global Delisting plans, wide quarterly loss
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DiDi’s American Depository Receipts fell 23% to $ 1.90 after the extraordinary General Assembly convened on May 23 to vote on the delisting of its shares from the New York Stock Exchange. DiDi said that while the company continues to explore listings on another internationally recognized exchange, this will not apply until the US delisting is complete.
“Although investors are well aware that DiDi Global wants to delist, the delisting process has taken investors by surprise,” said Gary Dugan, chief executive officer of the Global CIO office.
Separately, DiDi’s fourth-quarter net loss rose 95% to 383 million yuan from the previous year, while revenue fell 13% to 40.78 billion yuan.
DD Move from NYSE to Hong Kong – What to Know: QuickTech
DD has fallen more than 86% since it went public, wiping out $ 58 billion in market value. The company was one of the biggest targets in Beijing’s private sector crackdown last year, as regulators launched a cybersecurity probe just days after its IPO and forcibly removed its services from domestic app stores. The agency in Beijing, which is responsible for data security, has reportedly asked DD’s top executives to devise a plan to delist due to concerns that sensitive data could be leaked.
In March, the company halted preparations for its planned Hong Kong list, according to Bloomberg News, after China’s cyberspace administration informed executives that their proposals to prevent security and data leaks were too low.
The China Securities and Regulatory Commission said in a statement on Saturday that the Didi case would not affect negotiations with the US over audit access. Investors are optimistic after Beijing’s regulatory bodies revised a decade to restrict financial data sharing by offshore-listed companies. The move could help US regulators gain full access to the audit reports of the majority of the 200-plus Chinese companies listed in New York.
DD shareholders who wanted to convert their American depository receipts into Hong Kong shares before Didi’s NYSE withdrawal suffered another blow due to the lack of an immediate re-listing plan. It also added investor jitter on the way the company is moving, with concerns that more penalties could be imposed from regulators.
“The risk of the stock being delisted for too long before re-listing is very negative,” said Jason Hsu, Chief Investment Officer, Reliant Global Advisors Limited. “The expected liquidity premium is now clearly reflected in the price,” he said.
The Nasdaq Golden Dragon China Index fell 4.4%, extending a 2.3% decline from last week.
“DiDi news only adds bad news from China, which undermines any hopes for a sustained rally,” Dugan said. “International investors will once again stop waiting to restructure Chinese equities.”
(Adds a comment and China Golden Dragon Index move)
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