Premarket: Didi’s delisting could mark the end for Chinese stocks on Wall Street

“Didi repatriated to [Hong Kong] Brock Silvers, chief investment officer at Kaiyuan Capital in Hong Kong, tells me that is a significantly worrisome indicator for the greater US-China economic relationship. “

Shortly after its $4.4 billion initial public offering in the United States at the end of June, Chinese regulators banned Didi from app stores in China, arguing that it broke the law. data security and pose a network security risk. Its share price collapsed.

The decision to target Didi is widely seen as punishment for its decision to list shares abroad, and the company has become a prime example of China’s attempt to rein in the power of companies. Big Tech company.

Didi’s situation could spark a broader re-evaluation of Chinese companies that have listed shares overseas – including Alibaba, Pinduoduo, Baidu,, Nio (NIO) and Tencent Music (TME). Will they suffer the same fate?

“Didi repatriation looks like a trend starting and the market should expect that others will follow,” Silvers said. “Stock investors may not wait for the other shoe to drop.”

Pinduoduo (PDD) stocks fell 4% in pre-market trading, while Baidu (BIDU) down more than 1%. Alibaba (TORTOISE) New York-listed shares, which have fallen 48% this year, were slightly lower. Shares of Didi, which have fallen 44% from the IPO price, are down 3% before the market.

Investors in such stocks have been profitable for months. The S&P/BNY Mellon China Select ADR Index, which tracks the top US-listed Chinese companies, is down 40% this year.

Two developments this week underscore the fact that the financial relationship between the United States and China is fractured.

On Thursday, the US Securities and Exchange Commission finalized rules that would allow it to remove foreign companies that refuse to open their books to the country’s regulators. For years, China has denied US audits of its companies, citing national security concerns.

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

“Previous Chinese founders have come to [New York] for a number of reasons, including looser listing standards, often higher multiples, and location outside Beijing’s financial viability [and] “That calculus has rapidly changed, and today’s companies — especially market leaders or those in certain technology sectors — are likely to face pressure,” Silvers said. growing in listings on Chinese-controlled exchanges.”

Omicron worried about November jobs report

November looks to have produced another solid month of job gains as the US economy continues to recover from the pandemic.

The Latest: Economists polled by Refinitiv are expected to learn on Friday that 550,000 jobs were added last month. That would be the biggest increase since July.

America continues to add jobs but we are not back to normal yet

Such a reading could bolster the Federal Reserve’s determination to speed up the end of its bond-buying program in times of crisis. Chairman Jerome Powell said earlier this week that the Fed was considering a faster shutdown to curb inflation.

“A strong payrolls could reinforce the Fed’s recent hawkish stance,” said Jim O’Sullivan, chief US macro strategist at TD Securities.

But strategists will take a closer look at the headline numbers to gauge the state of the job market.

The labor force participation rate, which tracks the number of working-age people actively looking for work, will be watched carefully as economists watch for ongoing labor shortages, while data Wage growth data could indicate greater pressure on prices.

The occurrence of the Omicron variant of the coronavirus will also appear on the report, although its initial impacts will not show up in the release.

Mark Zandi, chief economist at Moody’s Analytics, told me it’s too early to say how severe the impact will be.

“Future waves of the virus will certainly hit job growth, but there is no way of knowing how bad that will be depending on the size and severity of the wave,” he said. . “My feeling is that the economic damage from each new wave of the virus will be less than the last, as vaccines and other health care measures become more effective, and economies become more resilient. should be more adept at navigating through the waves, but it’s certainly not difficult to construct darker scenarios.”

In the midst of virus uncertainty, what happens could rise again

Scientists are racing to determine if the Omicron variant is more transmissible and if it can evade a vaccine. In the meantime, Wall Street doesn’t know what to think.

The Latest: The S&P 500 rallied on Monday then sold off on Tuesday and Wednesday before rallying again on Thursday.

The disturbance is especially evident in the tourism sector. Shares of Delta Air Lines, America’s largest carrier, fell more than 7% on Wednesday before soaring 9% on Thursday. Marriott fell 3% on Wednesday and then rose 6% in yesterday’s trading.

The VIX, which measures the volatility of the S&P 500, has rallied 91% from early November this week before falling slightly again, while the CNN Business Fear & Greed Index is in the “extreme fear” zone.

What is next? Investment advisors say cooler heads will prevail for the moment, but the market remains vulnerable to any news headlines about the variant’s impact on public health or the background economy.

Mark Haefele, chief investment officer at UBS Global Wealth Management, told clients earlier this week: “Amid this uncertain backdrop, we advise investors to avoid hasty exits from risky assets. , which can reduce long-term profitability.


The US jobs report is due at 8:30 a.m. ET.

Also Today: The ISM Non-Manufacturing Index for November will shine a light on the health of the US service industry. It arrives at 10 a.m. ET.

Next week: Will consumer prices in the US continue to rise at the fastest rate in three decades?


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