Didi's delisting could spell the end for Chinese stocks on Wall Street - CNN
Dec 03, 2021 2 mins, 2 secs
You can listen to an audio version of the newsletter by clicking the same link.

What's happening: China's Didi announced Friday that it will "immediately" start the process of delisting from the New York Stock Exchange and pivot to Hong Kong.

Coming just months after the ride-hailing giant's Wall Street debut, the news sends a clear signal to investors as tensions between Washington and Beijing generate uncertainty.

"Didi's repatriation to [Hong Kong] is a significantly worrying indicator for the larger US-Sino economic relationship," Brock Silvers, chief investment officer at Kaiyuan Capital in Hong Kong, told me.

Its share price collapsed.

The decision to target Didi was widely seen as punishment for its decision to go public overseas, and the company became a prime example of China's efforts to curb the power of Big Tech firms.

Didi's situation is set to spark a broader reassessment of Chinese companies that have listed shares abroad — including Alibaba, Pinduoduo, Baidu, JD.com, Nio (NIO) and Tencent Music (TME).

Alibaba (BABA) shares listed in New York, which have already plunged 48% this year, are slightly lower.

China has for years rejected US audits of its firms, citing national security concerns.

And Bloomberg reported that Beijing is set to ban the loophole that allowed companies like Alibaba and Didi to list in New York in the first place.

"Chinese founders previously looked to [New York] for a number of reasons, including looser listing standards, often higher multiples and a domicile beyond Beijing's financial [and] regulatory grasp," Silvers said.

"A strong payroll print could further reinforce the Fed's recent hawkish pivot," said Jim O'Sullivan, chief US macro strategist at TD Securities.

But strategists will be scrutinizing more than the headline number to assess the state of the job market.

The labor force participation rate, which tracks the number of working age people actively seeking employment, will be carefully monitored as economists track ongoing shortfalls of workers, while data on wage growth could indicate broader pressure on prices.

The arrival of the Omicron variant of the coronavirus will also loom over the report, though its early effects won't show up in the release.

Mark Zandi, chief economist of Moody's Analytics, told me that it's too early to say just how severe the impact will be.

"Future waves of the virus will surely hurt job growth, but there is no way to know how badly as that depends on the size and severity of the wave," he said.


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