Midday April 4, shares of Chinese ride-hailing giant DiDi Global (NYSE:DIDI) stock were up 3% on heavier than usual volume. We’re talking about 56.6 million shares changing hands by noon EST. That’s more than the full-day average of 48.5 million shares. What’s going on, exactly?
It seems that a report from Bloomberg concerning the China Securities Regulatory Commission (CSRC) has DIDI stock traders buzzing. People familiar with the matter, according to the report, stated that the CSRC and other Beijing regulators are “preparing to give U.S. regulators full access to auditing reports of the majority of the 200-plus companies listed in New York as soon as mid-this year.”
This is huge news for U.S.-based investors in Chinese businesses generally. It’s also notable for DiDi Global’s stakeholders in particular. Moreover, it’s a surprising overture from Beijing’s regulatory authorities. Remember, these authorities have repeatedly cracked down on a number of China-based businesses.
For a while now, American investors in DIDI stock have been concerned that the shares would soon only be listed on a Chinese exchange. However, it now appears that the Chinese government may be willing to release the aforementioned auditing data to U.S. regulators. With that, U.S. financial-market authorities may be persuaded to allow DiDi Global to continue listing on the New York Stock Exchange.
Few things can cause a relief rally like the easing of tensions between nations. Let’s not get ahead of ourselves, though. Investors shouldn’t simply pour their entire account into DIDI stock based on this news development.
Reportedly, the details regarding Chinese regulators releasing the auditing data are still under discussion. There are no guarantees that this data will actually be handed over to U.S. regulators.
So far, however, financial traders are celebrating the news. The Nasdaq Golden Dragon China Index surged as much as 6.1% on April 4, signaling risk-on sentiment.
If Beijing actually releases the auditing reports to U.S. authorities, DIDI stock may be headed back toward $5. Therefore, risk-tolerant traders should consider adding a few shares now, in anticipation of a relief-rally follow-through.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
