Didi, China’s answer to Uber, is reportedly considering going private just one month after its New York Stock Exchange IPO. Didi denied the report on social media, but the stock opened 18 percent higher on the news, lending the Wall Street Journal report credibility.
It comes after Beijing halted all new downloads of the app pending a regulatory review of its privacy practices. Before the listing, Chinese regulators had told Didi to postpone its IPO. In tandem with new domestic restrictions on foreign listings, the government’s posture toward Didi indicates displeasure at the company’s choice to list in New York rather than Hong Kong or a Chinese Mainland exchange.
The news underscores Chinese president Xi Jinping’s commitment to developing domestic capital markets, which have long lagged those of advanced economies. A slew of financial reforms led to large capital inflows last year, particularly in China’s bond markets. Regulators appear to be leveraging the country’s tech behemoths to build an alternative to Western financing.
The tech crackdown, however, has fueled a sell-off not only in Chinese equities (to be expected) but also in the country’s bonds and currency markets. That suggests concerns about Beijing’s economic policy beyond the handful of companies targeted by the party. If foreign flight from China persists, the regulatory reforms will have backfired enormously.