It wants more safeguards for workers, consumers, and the country’s youth. Beijing seems to value small businesses over corporate behemoths and favors new technologies like electric vehicles, clean energy, and biotech over the “platform” companies that earned President Xi Jinping’s ire. It’s easy to see why Goldman’s clients were so worried.īut as the crackdown progresses, the Communist Party is dropping more clues about its priorities. It’s all in the name of limiting what the government sees as the companies’ monopolistic power-a perceived threat to Communist Party rule-and eliminating social inequality that can lead to public discontent. It banned its booming ed-tech industry from making profits and kneecapped video game makers like Tencent by restricting children’s screen time. (Didi denies the report.) The government ordered Didi, shopping platform Meituan, and e-commerce giant Alibaba to rectify past misconduct that interfered with fair competition and hurt drivers and passengers. and is now reportedly looking to take the firm under state control. Authorities suspended new sign-ups for Didi Global after the ride-hailing giant went public in the U.S. The government has hamstrung some of its largest homegrown tech stars, restricting or even forbidding them from operating their most promising business lines. ![]() But the prospect of China now being a no-go zone reflects just how much the regulatory campaign has spooked investors. The world’s second-biggest financial market after the U.S.-one the IMF expects to grow faster than almost any other major economy this year-looked like a surefire opportunity for investors up until Beijing started cracking down on Big Tech. “They need to be assured that what happened to Didi won’t happen to them,” said Protiviti’s Pang.The idea that investors should avoid the Chinese market would have been unfathomable even a few months ago. “Companies now feel vulnerable and exposed to different risks, including potentially damaging investor interests,” says Bruce Pang, head of macro and strategy research at China Renaissance Securities. As of Thursday, Didi had lost roughly $14 billion in value since it listed. ![]() The company is now trading at $11.21 per share, 21% below its offer price. “The companies are likely buying time to ensure that they’ve done enough due diligence that is required in this new Data Security Law era,” says Michael Pang, managing director at consulting firm Protiviti.Īnother concern is investor sentiment, given how badly Beijing’s surprise actions have hurt Didi’s stock. The string of shelved listings may indicate that companies are putting off IPOs until they better understand Beijing’s new regulatory scheme, including the State Council’s Tuesday directive on “illegal securities activities,” which the body has yet to clarify. Soulgate cited “alternative financing options” as the reason for yanking its IPO. ![]() Bike-sharing app Hello and dating platform Soulgate both scrapped their Nasdaq listing plans in late June the companies were aiming to raise $100 million and $198 million, respectively. China’s most popular fitness app, Keep, which operates under parent group Beijing Calories Technology, was eyeing a $500 million NYSE listing, but didn’t follow through on the debut that was supposed to take place this week, the FT reports.
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