This is a nervous stock market. News that Didi Global will delist from the New York Stock Exchange and move to Hong Kong sent Didi stock plunging 22% on Friday to its lowest point yet. That’s an understandable reaction: We don’t know exactly what the shift means for shareholders. But the news also knocked other Chinese stocks for a loop as well: Alibaba, Baidu and Pinduoduo each fell around 8%. Given how much these stocks have already been beaten down this year, investors may be overreacting.
There’s plenty of reason to be nervous about the fate of Chinese companies listed in the U.S., for sure. They’re being squeezed by both U.S. and Chinese authorities. The Securities and Exchange Commission is issuing new foreign-company auditing requirements that could force delistings in the future. At the same time, there’s persistent talk that Chinese regulators will outlaw a corporate structure widely used by domestic companies to get around foreign ownership restrictions so they can list in the U.S. If the structure gets banned, more delistings look inevitable. New listings have already dried up.