Chinese tech stocks: Doi Chuxing, Didi hit by possible sell-off

Image copyright Getty Images Image caption Angela Vannatta spent $10bn on Chinese internet stocks earlier this year Chinese internet stocks can’t go up forever, and now the most notable are facing potential losses. The…

Chinese tech stocks: Doi Chuxing, Didi hit by possible sell-off

Image copyright Getty Images Image caption Angela Vannatta spent $10bn on Chinese internet stocks earlier this year

Chinese internet stocks can’t go up forever, and now the most notable are facing potential losses.

The heads of China’s two largest internet companies have talked about potential sell-offs as they fear an onslaught from foreign competitors.

Among them is Didi Chuxing, the Chinese ride-hailing company that owns Uber’s business in China, which said it planned to spin off Didi Chuxing Technology.

The admission prompted a sharp fall for shares in the world’s biggest ride-hailing company.

The company is suffering from a general hangover in the world’s second-largest economy.

Didi chief executive Cheng Wei and Shenzhen-based Tencent Holdings’ co-chairman, Charles Zhang, are now worried that other Chinese tech companies may also be looking to spin off their businesses.

“It’s likely that the global boom of IT companies will not end at the end of this year,” Cheng said at the CES in Las Vegas on Wednesday.

On Thursday, Didi’s Beijing-listed shares fell by 25% to a low of Rmb71.6, or $9.48.

Source: BBC

In the first three months of the year, Didi said its co-founder and chairman had “easily exceeded his target” of reaching $10bn in valuation.

It now has a market value of about $68bn – more than three times that of Uber.

The latest losses caused by Uber’s aggressive expansion into China and a regulatory crackdown show how expensive, even at the lowest valuation, Chinese internet stocks can be.

It is unclear if either of Didi’s primary competitors will take the same path.

Alibaba and Tencent might be more interested in selling smaller assets, analysts said.

By spinning off its core business, Didi might be looking to limit its exposure to any drastic drop in the value of ride-hailing companies in China, said Robin Li, China’s top search engine.

China’s top internet companies have driven the nation’s stock market to record levels, causing local companies to pay through the nose for short-term gains.

Some small Chinese investors rushed to bank on the potential of a bubble, with top names such as Ant Financial, Weibo, and WeChat owner Tencent all hitting highs above $1,000 on Wednesday.

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