Beijing’s blocking of Didi app sends peers tumbling in HK

Bloomberg

Shares of Chinese technology companies slid in Hong Kong as investors stepped back to gauge the impact from Beijing’s move to block ride-hailing giant Didi Chuxing from app stores due to data security issues.
Tencent Holdings Ltd, which has a stake in Didi, slumped 3.6% in Hong Kong to erase its year-to-date gain. Meituan, ordered by China’s antitrust watchdog to rectify practices in May, lost 5.6%, while the Hang Seng Tech Index slid 2.3% to its lowest level since May 17.
“It’s clear that there’s a regulatory overhang on China’s tech giants at the moment and that may continue to weigh on sector valuations for the large internet platforms,” according to Matthew Kanterman, an analyst at Bloomberg Intelligence.
The sector is also facing increased selling pressure from technical traders after the Hang Seng Tech Index formed a bearish signal, dubbed as a death cross, when its 50-day moving average falls below the 200-day moving average in May.
Shares of Didi Global Inc tumbled in New York after China said it’s starting a cybersecurity review of the company, just two days after it pulled off one of the biggest US stock market debuts of the past decade. The Cyberspace Administration of China announced the app ban, citing serious violations on Didi Global’s collection and usage of personal information, without elaborating.
“The new challenges on data security and privacy and ownership and use is a bigger question as it is the monetisation of this data that is the key to these companies’ earnings,” said Joshua Crabb, a senior portfolio manager at Robeco in Hong Kong. “If that becomes at risk, the earnings and hence stock price implications could be much more dramatic than the antitrust fines we have seen so far.”
Didi’s hoard of personal data poses a threat to individual privacy as well as national security, the Global Times said in a Monday commentary that lauded China’s scrutiny of the ride-hailing giant. Also on Monday, the watchdog started cybersecurity reviews on several cargo, hiring platforms.
SoftBank tumbles as China blocks Didi app
Shares in SoftBank Group Corp tumbled on Monday after Chinese regulators ordered app stores to remove Didi Chuxing, run by the recently US-listed ride-hailing giant in which the Japanese firm is the top shareholder.
SoftBank falls as much as 6.1% in Tokyo, the most in Japan’s Nikkei 225 Stock Average and the biggest decline since it reported earnings in May.
The investigation deals another blow to the shares of Masayoshi Son’s tech and investing conglomerate, which have lost nearly a third of their value since hitting a record in March.
Despite posting the largest-ever quarterly profit for a Japanese company less than two months ago, investors have been disappointed by a lack of any new share buyback announcements.
SoftBank’s Vision Fund is Didi’s top shareholder, with a stake of more than 20%, making it of the largest single investments in its expansive portfolio of tech companies.