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Didi to exit NYSE on June 10 amid uncertainty about China restart

Group readies apps for relaunch but Beijing undecided on penalty for ride-hailer

Didi Global has been barred from signing up new customers for its ride-hailing services and other apps since last July.    © AP

HONG KONG -- Didi Global will trade on the New York Stock Exchange for the last time on Friday, ending a wild 11-month ride on the prestigious U.S. market while leaving investors in the lurch about its future direction.

Didi shareholders voted overwhelmingly to back the company's delisting plan on May 23 after the ride-hailing group said that Beijing officials had made clear that they would not lift a ban on adding new customers unless Didi first left the NYSE.

Until now, the company has not notified shareholders of its NYSE exit date. However, two persons briefed on Didi's plans told Nikkei Asia that the ride-hailing group would trade only until Friday.

It remains unclear when Beijing will again allow Didi to sign up clients and bring its apps back to popular app stores.

A person familiar with discussions in Beijing said that the authorities will require Didi to pay a fine first, but were undecided on the magnitude of the unprecedented penalty. Meanwhile, a Didi product manager said that the company's apps had been readied for relaunch "soon."

"Delisting from New York won't automatically lead to a relaunch of Didi's apps in China," said a person close to senior management. "Those are two separate matters."

Didi, which previously controlled around 90% of China's ride-hailing market, has seen customers trickle away to rivals amid the regulatory crackdown touched off by management's decision to proceed with a $4.4 billion NYSE initial public offering on the eve of the Chinese Communist Party's centenary last July -- despite Beijing's worries that the listing could give American regulators access to sensitive domestic data.

Along with Didi, two other Chinese companies that listed in New York around the same time, Kanzhun and Full Truck Alliance, were also evicted from app stores and barred from signing up customers last summer.

On Monday, Full Truck's two main apps again began taking on clients, helping fuel a rally in the trio's shares in New York on expectations all three would soon be allowed to resume normal operation.

Amid growing worries that China could fall well short of its official economic growth target this year of "around 5.5%," the authorities have sent signals about relaxing pressure on the technology sector. The Hang Seng Tech Index, which includes many major Chinese internet platforms, has climbed 17.8% since May 24 while the Nasdaq Golden Dragon China Index, a broad gauge of Chinese companies traded on U.S. exchanges, has risen 34.5%.

Didi Global President Jean Liu co-founded the company in 2012.   © Reuters

Alibaba Group Holding, a Didi shareholder, has paid the highest penalty so far in China's tech crackdown, swallowing a 18.2 billion yuan ($2.72 billion) fine for anti-competitive practices last year. Didi is expected to be penalized under data protection laws, among others.

Didi's annual loss nearly quintupled to 49.34 billion yuan last year from a year earlier although its revenues rose 22.6% to 173.83 billion yuan.

Didi gained 12.1% in New York on Wednesday to close at $2.51. Didi originally sold shares in its IPO last June for $14 each.

Didi's largest shareholder is the SoftBank Vision Fund, with a 20% stake. Uber Technologies hold 11.9% while Tencent Holdings has 6.5%. 

Didi shares may continue to trade "over the counter" in New York after Friday via OTC Markets' Pink Market. This is how Tencent Holdings, China's most valuable company by market capitalization, has long traded in New York.

"Going OTC is really not that big a deal," said wealth manager Tariq Dennison of GFM Asset Management. "What it means is [just] it no longer trades on an exchange and there is no central place for price discovery.

"Many institutions probably won't care, because if they want to buy a million shares of Didi, they will find a way to do it," he said. "Some retail investors may notice a difference... [because] some brokerage platforms don't do OTC at all because it is just too difficult for them and they just want to deal with the exchanges."

Still, Dennison predicted that trading volumes for Didi will tumble once it moves to the Pink Market.

Several other Chinese companies are exiting the NYSE alongside Didi, though not by choice.

Online property site Fang Holdings is being ejected for failing to file financial results dating back to 2020 while private education service Puxin is being liquidated by court order on request of its creditors. Both auto financing company Weidai and mobile app developer CooTek (Cayman) have been stuck below the stock exchange's market capitalization minimum.

Dozens of other Chinese companies have been notified by the U.S. Securities and Exchange Commission that could be delisted by 2024 unless regulators are able to get full access to their audit records, which Beijing does not currently allow.

In announcing its delisting intentions in December, Didi said it would seek to list on Hong Kong or another major international exchange so that NYSE stockholders could convert their holdings to new shares. The company listed its American depository receipts on the Mexican Stock Exchange last October, but trading there may be affected by the NYSE delisting while pressure from Beijing has kept Didi from joining other markets so far. 

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