Why does Didi source from pre-market trading in the United States?

Budrul Chukrut | LightRocket | Getty Images

Didi shares climbed to 14% in pre-market trading in the United States on Friday after the company announced its intention to withdraw from the New York Stock Exchange and pursue a listing in Hong Kong instead. .

Shares of the Chinese rideshare giant have been hammered by regulatory issues in its home country since it went public in the United States earlier this year. The stock is down about 40% from its initial listing price.

Didi’s stock price was up 6% on Friday just after 6 a.m. ET.

The company said Thursday that it would withdraw from the New York Stock Exchange “immediately” and begin preparations for a separate listing in Hong Kong. US stocks are to be converted into “freely tradable stocks” on another international stock exchange, according to a statement.

Investors can expect a smooth transition from US listed Didi shares to Hong Kong. Didi’s decision to go ahead with delisting rules out the risk that she will be forced to do so by regulators.

Neil Campling, global TMT analyst at Mirabaud Equity Research, said Didi shares were likely higher for technical reasons. Short sellers – who bet on a plummeting stock price – may choose to exit their positions with buy orders rather than play the waiting game, according to Campling.

“The risk of a write-off could trigger some technical hedging operations, as shorts may seek to close their positions rather than face the hassle of waiting for the timing of the write-off with the custodians,” he said. he stated in a note on Friday morning.

Daniel Ives, chief executive of Wedbush Securities, said the delisting was “just another black eye on Chinese tech stocks.”

“The street remains very diverse among Chinese tech stocks and this Didi situation is another caveat,” Daniel Ives, chief executive of Wedbush Securities, told CNBC, adding that Didi shareholders would likely look to another company. supported by SoftBank, Grab, to play the role of Asian Mobility Market.

Grab went public on Thursday following a deal with specialist acquisition firm Altimeter Growth Corp. Shares of the Singapore-based food transportation and delivery company lost more than a fifth of its value at the close.

Technological repression in China

Beijing regulators have flexed their muscles in an attempt to keep major Chinese internet companies online. The crackdown began with the founder of Alibaba Jack Ma and his financial technology company Ant Group, whose IPO was suspended late last year following critical comments from the Chinese tech billionaire about regulators.

Beijing’s tech crackdown quickly shifted to other areas, including carpooling. Chinese regulators are said to have raised concerns about the safety of Didi’s data ahead of the company’s IPO in June. Two days after his debut, Didi was struck by a criticism from the Beijing cyberspace agency. A week later, authorities ordered Chinese app stores to remove Didi’s main app.

According to a Bloomberg report last week, Chinese regulators have asked company executives to come up with a plan to delist the United States. Didi declined to comment at the time.

Meanwhile, Washington is also seeking to tighten restrictions on Chinese companies floating on U.S. stock exchanges. The U.S. Securities and Exchange Commission on Thursday finalized rules allowing it to delist foreign stocks for failing to meet audit requirements.

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