A Didi Chuxing autonomous taxi during a pilot test drive on the streets in Shanghai.
Hector Retamal/AFP/Getty ImagesU.S.-listed shares in Didi Global and other Chinese tech companies tumbled on Tuesday after regulators intensified a crackdown on the country’s New York-listed technology companies.
Didi Global (ticker: DIDI) stock fell more than 25% on Tuesday after Beijing’s Cyberspace Administration ordered app stores to remove the Chinese ride-hailing giant’s services from its platforms on Sunday.
The cybersecurity regulator widened its attack on Monday, launching a review of two U.S.-listed Chinese app makers: Full Truck Alliance (YMM), which operates truck-hailing apps; and online recruiting app Kanzhun (BZ).
The regulator ordered the companies to stop adding users while the investigations were conducted, The Wall Street Journal reported. Full Truck Alliance fell as low as 20% in premarket trading and was still in the red during regular trading, while Kanzhun was down more than 10%.
And on Tuesday, China released guidelines through state-run Xinhua News Agency that would revise rules and strengthen supervision for companies listed in overseas markets, according to the Journal. The additional scrutiny could make it harder for Chinese companies to raise money in the U.S.,
A spokesperson for Full Truck Alliance told Barron’s the company would fully cooperate with the regulator during the cybersecurity process, saying, “FTA is conducting a comprehensive self-examination of any potential cybersecurity risks and will continue to improve its cybersecurity systems and technology capabilities.”
The spokesperson added: “Apart from the suspension of new user registration in China, FTA and its mobile applications maintain normal operation.”
The trio of Chinese app makers went public in the U.S. last month.
Ahead of Didi’s initial public offering, which raised $4.4 billion, reports emerged the company was facing an antitrust probe by China’s State Administration for Market Regulation (SAMR) over whether its pricing mechanism is transparent enough and whether it has been unfairly squeezing out smaller rivals.
Didi made its U.S. debut on Wednesday before attracting the attention of another regulator on Sunday. The cyberspace regulator removed Didi’s Chinese services from their platforms, citing illegal collection of personal data, the Journal reported.
“China is cracking down on big tech, but the decision to remove the app from domestic platforms appears to be timed for maximum impact and embarrassment,” said Markets.com analyst Neil Wilson. “China’s Communist Party is bristling at the number of Chinese companies listing in the U.S. this year, but there is genuine concern at the heart of this—regulators are not impressed with the way Didi and other Chinese tech companies handle data,” he added.
Wedbush analyst Brad Gastwirth struck a similar note, writing that “while Chinese regulators are pointing to Didi’s collection of user data as the impetus for their actions, with the move coming right after its US IPO, there is speculation that China targeting Didi because of its decision to list outside of China.”
In a statement, Didi said that users who had already downloaded and installed the app could continue using it, though it would no longer be available in China.
“The Company will strive to rectify any problems, improve its risk prevention awareness and technological capabilities, protect users’ privacy and data security, and continue to provide secure and convenient services to its users,” Didi said on Sunday. “The Company expects that the app takedown may have an adverse impact on its revenue in China.”
Kanzhun said on Monday it would fully cooperate during the review process. “The Company plans to conduct a comprehensive examination of cybersecurity risks and continue to enhance its cybersecurity awareness and technology capabilities.”
Perhaps not unrelated, Chinese social-media company Weibo (WB) on Tuesday jumped as much as 15% on reports that it’s planning to go private., though the company denied the reports.
The selloff spread across the Chinese tech sector. Alibaba (BABA), which already had regulatory issues of its own, was down 3.2% at $210.80, while JD.com (JD) slumped 4.4% to $72.88, Baidu (BIDU) dropped 4.1% to $188.70, and NetEase (NTES) slipped 3% to $109.96.
Write to Callum Keown at callum.keown@dowjones.com
Didi and Other U.S.-Listed Chinese Tech Stocks Tumble Amid Beijing Crackdown - Barron's
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