China to Tighten Rules on Data, Overseas Listings After Didi IPO

(Bloomberg) --

China issued a sweeping warning to its biggest companies, vowing to tighten oversight of data security and overseas listings just days after Didi Global Inc.’s contentious decision to go public in the U.S.

Rules for overseas listings will be revised, the State Council said in a statement Tuesday, while publicly-traded firms will be held accountable for keeping their data secure. China also said it will step up its regulatory oversight of companies trading in offshore markets.

The move comes after the cyberspace regulator announced a probe into Didi, which controls almost the entire ride-hailing market in China, and pulled the company’s app from stores. The strong response from Beijing, which came just days after the $4.4 billion IPO, prompted Didi’s shares to plunge as much as 30% in pre-market U.S. trading on Tuesday.

U.S. exchanges remain a popular choice for Chinese entrepreneurs, especially in the tech industry, despite efforts by Beijing to encourage companies to list back home, including Hong Kong. Chinese firms raised $7.9 billion last month, the most since Alibaba Group Holding Ltd.’s IPO in September 2014.

Beijing’s concern is what made Didi and other technology firms so valuable to investors: It holds vast amounts of sensitive data from half a billion annual active users, mostly in China. Over the past year, Xi’s government has sought to gain control of this data, both to protect users from abuse and find a way to use it to spur broad-based economic growth rather than enrich a cohort of billionaires that could potentially challenge the Communist Party’s authority.

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