US-China Conflict Hits New York Stock Market... Will the Korea Premium Rise? [Correspondent Diary]

TikTok Privacy Conflicts Continue with New Didi Chuxing Controversy
Series of Regulations Following US Stock Market Listing
Wall Street Expects Increased Investment Risks in Chinese Firms
Coupang Contrasts with 'Korea Premium'

[Image source=EPA Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Chinese authorities have launched a series of attacks targeting their domestic companies listed on the U.S. stock market. Although these adverse events were anticipated during the listing process, the scale and timing have exceeded expectations. This issue, which occurred immediately after $4.4 billion of U.S. capital was invested, is likely to significantly impact investor sentiment toward Chinese companies listed on the New York Stock Exchange.

On the 4th (local time), Chinese regulatory authorities announced a ban on new users for Didi Chuxing, China's largest ride-sharing company, which was listed on the New York Stock Exchange on the 30th of last month, followed by the removal of the Didi Chuxing app from app stores.

In response, Wall Street has pointed out that this is an extremely unusual 'retaliation' against companies listed on the U.S. stock market. U.S. media have also expressed discomfort, stating that China's regulations are targeting companies listed on their own stock market.

The Wall Street Journal (WSJ) analyzed that the regulations announced immediately after Didi Chuxing's successful IPO on the U.S. stock market were not about data protection, as the authorities claimed, but were aimed directly at Didi Chuxing itself. This is interpreted as a warning sent by the authorities to Chinese tech companies.

Kendra Schafer, Head of Technology Policy at consulting firm Trivium China, explained to WSJ, "Chinese authorities sent a signal through Didi Chuxing that tech companies must comply with Chinese laws and regulations to be allowed to list anywhere in the world."

Within China, there have been claims that Didi Chuxing may have provided sensitive data to the U.S. government during the listing process. In response, Didi Chuxing’s Vice President Li Min denied these claims, stating that personal information is stored overseas and vowed to take legal action, but was unable to prevent regulatory measures.

In a statement released after the app store removal order, Didi Chuxing expressed, "We appreciate the authorities pointing out the risk factors. We will sincerely correct the issues," showing a conciliatory stance.

This contrasts sharply with the earlier U.S. concerns about the Chinese video-sharing app TikTok, which is very popular in the U.S. and was suspected of storing Americans' personal information in China.

Didi Chuxing was expected to rival Uber, the largest ride-sharing company in the U.S., backed by the massive Chinese market. There were even forecasts that its market capitalization would be valued at $100 billion.

However, on its first day of listing, Didi Chuxing’s stock price closed 1% above the IPO price of $14. Its market capitalization was $80 billion. The IPO price was set within the initially planned range of $13 to $14.

Wall Street attributed Didi Chuxing’s lackluster IPO performance to the poor results of recently listed Chinese companies on the U.S. stock market and the crowded market conditions with multiple new listings. However, some analysts argue that regulatory risks from Chinese authorities were a significant hindrance.

Didi Chuxing’s evaluation is also compared to Coupang. Coupang raised its IPO price target several times before its April listing and recorded a market capitalization of $88.9 billion on its first day. During trading, it even joined the $100 billion club.

With the New York Stock Exchange opening on the 6th, when adverse factors are expected to be reflected, there is a strong possibility of a market capitalization reversal between Didi Chuxing and Coupang.

This incident may serve as an example of excessive intervention by Chinese authorities in the market. The previously applied "China Premium" for Chinese companies may also come under scrutiny.

Amid U.S.-China tensions, attention is focused on whether Korean companies will benefit from a "Korea Premium" while Chinese companies face a "China Discount."

This content was produced with the assistance of AI translation services.