US-listed Chinese stocks plummet as government crackdown rattles traders

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Shares of three Chinese companies that recently went public on US exchanges plummeted on Tuesday as investors reacted to news that the Chinese government is investigating the tech firms.

Shares of ride-hailing giant Didi tanked more than 25 percent at the open Tuesday morning to about $12 per share.

Full Truck Alliance, which bills itself as an Uber-like service for Chinese truckers, traded over 21 percent lower, at about $15.30, and shares of Kanzhun, an online recruiting app, fell 9 percent to about $33 per share.

All three companies were the focus of Chinese government probes announced over the weekend.

The US markets were closed Monday to commemorate the Fourth of July holiday, so investors are reacting to news of the government crackdown on Tuesday.

Shares of other major Chinese companies listed in the US also fell on concerns that the government may crackdown on more companies. Shares of Tencent Music Entertainment fell more than 5 percent at the open and Alibaba stock slipped more than 1 percent.

The Cyberspace Administration of China announced Friday, just two days after Didi’s stock began trading on the New York Stock Exchange, that it’s investigating the company over cybersecurity concerns.

The company cannot add new users during the probe and its app has been removed from app stores, the Chinese government said over the weekend.

The Wall Street Journal reported Monday that the Chinese cybersecurity watchdog had suggested Didi delay their US IPO weeks ago, but the company went ahead anyway.

And Beijing on Monday widened its crackdown on the recent wave of homegrown tech companies that have floated shares on exchanges in the US.

The Cyberspace Administration of China announced it’s also investigating Guizhou-based Full Truck Alliance, which bills itself as an Uber-like service for Chinese truckers, and Kanzhun, an online recruiting app.

Full Truck Alliance began trading on the NYSE in June and Kanzhun began trading on the Nasdaq about a week earlier.

The weekend’s moves are the latest effort by Beijing to assert its authority over the company’s increasingly powerful technology sector.

In April, Beijing hit e-commerce giant Alibaba with a $2.8 billion fine as a result of an anti-monopoly probe. Food-delivery giant Meituan also remains under a similar anti-monopoly investigation.

The development also underscores the risks associated with investing in Chinese companies, as many of them increasingly seek to tap US investment dollars by going public on the NYSE or Nasdaq.

In fact, before it went public, Full Truck Alliance told investors that it was asked to share business details with Chinese regulators on issues ranging from user protection and pricing to competition.

It warned that “there is no guarantee that such regulatory communications would not result in substantial penalties or orders” that could affect the company’s operations and growth.

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