Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Will Alibaba be the next DiDi?

The short journey of the Chinese ride-hailing giant mirrors the experience of overseas listed Chinese technology giants this year, who are suffering more than $1 trillion losses since February 2021.

Source: Bloomberg

2021 is an extraordinary year for US listed Chinese stocks. Just when investors are getting ready to turn over the page, DiDi Global Inc's withdrawal from the New York stock market reminds us that it may not be over yet.

Only five months after going public, China’s app giant DiDi Global, the largest ride hailing company with 10.9 million active daily users, announced to switch its listing to Hong Kong last Friday. After five volatile months, DiDi’s stock is now priced with an over 50% discount to its IPO price ($14).

What happened to DiDi?

DiDi’s delisting plan didn’t come without warning. It’s not news to traders that the Chinese government has opposed the company’s New York IPO from early stages, reason being concerns over potential leakage of sensitive data to the US, viewed as the main geopolitical rival to China. As a response to DiDi’s ‘unapproved’ listing, within days of the initial public offering, Beijing announced to restrict DiDi’s app downloads and started to crackdown on technology companies listed overseas. DiDi, slumped by 44% in the first month, dropped the most in its initial months among all Chinese IPOs.

Source: TradingView

Perhaps what surprised the markets most is not just the withdrawal of DiDi, but the extreme power policy maker hold over giant firms. Even the market has repeatedly witnessed Chinese tech companies grappling with Beijing’s tightened regulations, ranging from digital service, education to online games and the regulatory risk for Chinese companies is still way beyond most investor’s expectations.

Who will be the next DiDi?

The short journey of the Chinese ride-hailing giant is the smallest of almost all the overseas listed Chinese technology giants, with total losses amounting to more than $1 trillion since February 2021. Amongst them, Alibaba is one of the most prominent, whose shares have plummeted by more than 55% since February, landing on its four-year-low this month.

So, will Alibaba or any other data-rich Chinese company repeat the story of DiDi in the near future?

This month, Beijing was reported drafting regulations to effectively ban companies from going public on overseas markets, while the US government is also pushing ahead to remove Chinese and Hong Kong listed companies if they don’t comply with Washington’s disclosure requirements. Both sides show little sign to ease the trading environment for Chinese stocks but opens the door for any possibility.

No one can predict what may come next for these bruised Chinese leading firms, however, the market has certainly priced in the soaring risks. For example, pessimistic analysts disclosed their value of Alibaba at all-time low of 13 times projected earnings, down almost 30 times from a year ago, compared to its e-commerce peer Amazon’s 66 times.

Source: macrotrends.com

Alibaba technical analysis

Alibaba Group Holding Ltd (All Sessions) rose this week after announcing a reorganisation of its e-commerce teams and appointing a new Chief Financial Officer. In addition to this, the People’s Bank of China’s decision to expand support for the slowing down economy by reducing banks’ reserve requirement ratio also helped to boost the broad Chinese sectors. As a result, Alibaba’s share price jumped by almost 10% on Monday and closed the gap left by last week’s dip.

However, even though the stock is immensely undervalued, worries and uncertainty will likely remain to weigh on the sentiment. Current support is hanging around $110, all the way back to September 2016, the next support will be further down to $95.

On top of current levels is the resistance line around $139, which if broken could see the stock jump back on the 50 days moving average to fill the gap between $144 and $151.

Source: TradingView

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Introducing our best ever web platform

Enhance your CFD trading with the new IG Trading platform:

  • Quicker deals, with one-click execution from lists

  • Real-time updates, with news and Twitter feeds

  • Orders to part close, price change alerts, a dark theme and more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.