Reaction to China imposing $1.2 bln fine on Didi Global


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The following are comments from analysts and investors after China cybersecurity regulator fined Didi Global Inc 8.026 billion yuan ($1.2 billion) after a year-long probe found the ride hailing giant had violated laws including ones pertaining to data security.

SAMUEL SIEW, MARKET SPECIALIST AT CGS-CIMB SECURITIES, SINGAPORE:

“Prior to the conclusion of this, there were a lot of fears in markets that there would be more than just a fine. Now, with it settling as just a fine, it’s lighter than what the possible implications were initially feared.

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“After this Didi incident, it actually wraps up most, if not all, of the outstanding technology-related clampdowns that started last year.

“It actually shows that the new direction the Chinese government is taking will be on the technology side. If you look at what the Chinese government said in their recent meetings, they’re all favoring a platform economy or the technology economy and they want to use it as a way to help boost the Chinese economy. So that is a shift from what we saw last year, and right now, with much more support, the technology side will see potential uplift.”

TRAVIS LUNDY, ANALYST AT QUIDDITY ADVISORS, HONG KONG, WHO PUBLISHES ON RESEARCH PLATFORM SMARTKARMA:

“I had expected a $1 billion number because it was a round number. The number chosen was a different one. But similarly still a large penalty against the private equity and private owners at the top.

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The fine should mark the end of Didi’s regulatory troubles. If there were more, they’d have waited until those were understood and addressed to levy the fine.

The catharsis should allow the stock to pursue a Hong Kong listing. It could theoretically list in the STAR market but I expect that the existing owners would prefer Hong Kong, and now that the regulatory troubles are settled, Hong Kong would have less reason to nix it.”

FRASER HOWIE, AN INDEPENDENT COMMENTATOR AND AUTHOR OF BOOKS ABOUT CHINA’S FINANCIAL SYSTEM:

“This closes a very difficult chapter for Didi but the business environment for tech companies remains troubling. In addition Didi’s business is all about moving people but China is going from one lock down to another. Cities get shut down virtually within hours, a horrible business for ride hailing.”

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DAVID BLENNERHASSETT, BALLINGAL INVESTMENT ADVISOR, WHO PUBLISHES ON SMARTKARMA:

“Definitely a step forward, and a means to lifting restrictions on adding new customers to its platform, and potentially restoring its app on domestic app stores.”

“Didi had 174 billion yuan of revenue in FY21, so this fine is 4.6% of revenue. I see media articles saying that Alibaba’s fine equated to about 4% of its 2019 domestic sales, and Meituan’s was 3% of its 2020 domestic sales.”

“I would think Didi considers themselves lucky. They stubbornly listed in the U.S. when regulatory issues were outstanding.”

MING JIN, MANAGING PARTNER AT BOUTIQUE CHINESE INVESTMENT BANK CYGNUS:

“This means the second shoe has fallen and the next step is to resume apps in the app stores, which is definitely a good thing for Didi in terms of business operations. However it is hard to say whether this will help with its relisting plan in Hong Kong, as Didi still has a number of unresolved compliance issues.” (Reporting by Scott Murdoch and Kane Wu in Hong Kong, and Rae Wee in Singapore; Compiled by Anshuman Daga; Editing by Christopher Cushing)

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