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Should You Invest in Chinese Companies After China’s Didi Crackdown?

edited July 8 in Other Investing

Should You Invest in Chinese Companies After China’s Didi Crackdown?
Regulators pounced on China’s biggest ride-hailing company after its U.S. IPO, raising questions about the risks retail investors face.


https://www.bloomberg.com/news/articles/2021-07-06/didi-stock-should-you-invest-in-chinese-tech-companies-after-crackdown


By Claire Ballentine
July 6, 2021, 6:54 PM CDT
Updated on July 7, 2021, 7:32 AM CDT

Didi Plunges Below IPO Price as China Cracks Down on Tech
Unmute
Didi Plunges Below IPO Price as China Cracks Down on Tech
The Chinese version of Uber had just started trading in the U.S. when regulators in Beijing stepped in and all but halted growth in its biggest market.

The actions that China’s cyberspace regulator took this week against Didi Global Inc. — in the name of domestic security — complicated the picture for investors betting on the country’s tech giants. Didi’s share price fell as much as 25% on Monday before paring some losses.


Last week, Didi pulled off the second-largest U.S. initial public offering for a Chinese firm, raising $4.4 billion in U.S. dollars. It had an initial 29% pop but then fell again, ending the day 1% above the IPO price with a market value of $68 billion. It’s not a household name in the U.S. yet, but Didi is ubiquitous in China.


Didi’s not the first Chinese tech giant to run afoul of regulators. In November, China pulled the Ant Group Co.’s Hong Kong listing, and soon after that, shares of Chinese tech companies fell globally out of concerns about tougher rules. Then in April, China fined Alibaba Group Holding Ltd. after a speedy investigation. Now, Beijing is planning to tighten rules in a way that would allow them to block Chinese companies from listing overseas, according to people familiar with the matter. That could potentially prevent giant firms such as ByteDance Ltd. from selling shares outside China.






The short answers maybe yes for long terms

I am buying more Etf (eem fxi mathewAsia funds)
instead of individual private stocks

Comments

  • As much as I'd like to I'm not investing in anything China at this time. When your success or failure is based on the whims of the country's leader I'll just step away. Look what he did to BABA. No thanks.
  • It is understood that investing overseas has its inherent geopolitical risk. Given the worsening political climate between China and US since the Trump administration, we have reduced our exposure especially to China substantially after profited nicely in the last 10 years. Biden just signed an executive order to delist a number of Chinese companies from US stock exchanges that are considered doing business to benefit Chinese military.

    Alibaba situation in spring should be a warning indicating the communist party is tightening its control of their private business. Jack Ma disappeared from the public for several months. Many suspected he was house-arrest until he behaves properly, i.e. no more bad mouthing of the communist party in the public. Chinese tech companies like to list themselves in the “rich” foreign stock exchanges. I believe Didi situation is the early sign of not so pleasant things to come.
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