Didi Chuxing Delisting Blow... Market Cap Loss of US-Listed Chinese Companies Exceeds $1.1 Trillion

[Asia Economy Reporter Park Byung-hee] Bloomberg reported on the 4th (local time) that the total stock price loss of Chinese companies listed on the New York Stock Exchange has exceeded $1 trillion since February. Chinese companies listed on the New York Stock Exchange are facing a severe downturn due to continued regulatory measures by Chinese authorities.

The Nasdaq Golden Dragon China Index, which reflects the stock prices of 95 China-related companies listed on the New York Stock Exchange, plummeted 9.1% on the 3rd. This was the largest single-day drop since 2008.

The Nasdaq Golden Dragon China Index closed at an all-time high of 20,688.32 on February 16 this year. However, following a series of regulatory actions by Chinese authorities, the index has been unable to avoid a sharp decline. The closing price on the 3rd was 8,896.50, 57.0% lower than the peak on February 16. The year-to-date decline has also expanded to 43%.

The market capitalization loss of the 95 companies reflected in this index since February has exceeded $1.1 trillion. Alibaba's stock price fell nearly 60%, reducing its market capitalization by about $430 billion. The market caps of JD.com and Baidu also decreased by $43 billion and $40 billion, respectively.

The Nasdaq Golden Dragon China Index has recorded daily declines of more than 5% eight times since February. In comparison, the S&P 500 Index has only recorded such drops five times in the past ten years.

[Photo by EPA Yonhap News]

On the 3rd, China's largest ride-hailing company Didi Chuxing announced its delisting from the New York Stock Exchange, which further triggered the index's plunge. On that day, Didi Chuxing's stock price plummeted 22.18%, closing at $6.07. The IPO price was $14.

Didi Chuxing was listed on the New York Stock Exchange (NYSE) on June 30, one day before the 100th anniversary of the founding of the Chinese Communist Party. The Chinese government expressed opposition to Didi Chuxing's listing on the New York Stock Exchange due to concerns over national secrets leakage. However, Didi Chuxing proceeded with the listing, raising $4.4 billion (approximately 4.979 trillion won) and making a spectacular debut on the NYSE.

However, Chinese authorities immediately launched strong regulatory measures. On July 2, the day after the 100th anniversary of the Communist Party's founding, Chinese authorities announced a cybersecurity investigation into Didi Chuxing, and two days later, ordered the removal of the Didi Chuxing app from all smartphone app stores in China.

Analysts suggest that Didi Chuxing's decision to delist from the New York Stock Exchange was due to its inability to withstand continued pressure from authorities. There are also concerns that other companies may follow suit and delist in the near future.