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Thursday, Aug 11, 2022

China to conclude Didi cybersecurity probe, lift ban on new users

China to conclude Didi cybersecurity probe, lift ban on new users

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Chinese regulators are concluding probes into ride-hailing giant Didi Global Inc and two other firms and are preparing to allow their apps back on domestic app stores as early as this week, the Wall Street Journal reported on Monday.
The report, citing unnamed people familiar with the issues, is the latest signal to investors that official promises to ease pressure on China's internet sector may be gaining traction.

Didi's U.S. shares jumped 50% to $2.78 in pre-market trade as short sellers bailed out while Hong Kong's Hang Seng tech index (.HSTECH) surged and closed 4.6% higher.

Didi did not immediately respond to Reuters' requests for comment. The Cyberspace Administration of China (CAC) was not immediately available for comment.

Regulators are also planning to allow apps of logistics platform Full Truck Alliance Co (YMM.N) and online recruitment services company Kanzhun Ltd back on app stores this week, the WSJ said, citing people familiar with the discussions.

Full Truck Alliance's Yunmanman and Huochebang apps, two of China's major truck-hailing platforms, have resumed new user registration, Reuters checks on Monday showed.

Full Truck and Kanzhun did not immediately respond to requests for comment, but investors were optimistic. Full Truck shares leapt 28% in pre-market trade and Kanzhun shares rose 21%.

"Since the middle of May policies of the central government have pointed to less regulation (of the sector)," said Steven Leung, executive director of institutional sales at brokerage UOB Kay Hian in Hong Kong.

"This is a second confirmation that the central government isn't going to do anything more. It helps sentiment," he said, though adding that it was unlikely to herald a return to previous growth expectations or prompt a longer stock rally.

The CAC had ordered app stores to remove 25 apps operated by Didi last year as part of a wider crackdown drawing in some of China's biggest corporate names.

Authorities also told the company to stop registering new users, citing national security and the public interest.

The moves came just days after the ride-hailing giant listed in New York and sent already fragile markets into a tailspin.

The three companies are still expected to face financial penalties, along with offering 1% equity stakes to the state and give the government a direct role in corporate decisions, WSJ reported.

Didi last year announced plans to de-list in the United States in favour of a new listing in Hong Kong.
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