DiDi Delisting’s Effect On ETFs

DiDi Delisting’s Effect On ETFs

In the U.S., 58 ETFs carry the Chinese ride-hailing company’s stock.

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Reviewed by: Dan Mika
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Edited by: Dan Mika

Beijing kicked off a summer of economic tamp-downs across entire industries in July after China’s top ride-hailing firm DiDi Global listed its shares on the NYSE.

Now that catalyst event is being rolled back.

DiDi announced Friday morning that it’s delisting from the NYSE and plans to re-list on the Hong Kong Stock Exchange, bringing an end to the company’s short life as a U.S.-listed stock. It’s not clear how long it’ll take for DiDi to delist, or what exactly that means for ETFs that own the company.

Who Holds DiDi?

There are 58 U.S.-listed ETFs that hold DiDi stock, according to Bloomberg data. These funds are a blend of focus on China, emerging markets and travel technology.

However, the vast majority hold less than 0.1% of their weight in the company. The table below shows the top 10 ETFs based on weight as of Dec. 3.

 

TickerFundWeightActive/Passive
AWAYETFMG Travel Tech ETF3.98Passive
EMQQEmerging Markets Internet & Ecommerce ETF2.93Passive
CHIIGlobal X MSCI China Industrials ETF1.67Passive
XBUYAmplify International Online Retail ETF1.45Passive
GIGESoFi Gig Economy ETF0.81Active
IBUYAmplify Online Retail ETF0.80Passive
DINTDavis Select International0.60Active
DWLDDavis Select Worldwide ETF0.44Active
NUEMNuveen ESG Emerging Markets Equity ETF0.31Passive
IPORenaissance IPO ETF0.26Passive

 

Those 10 funds have just shy of $55 million worth of assets in DiDi shares.

What Happens Now?

It’s not exactly clear when DiDi plans to re-list in Hong Kong, as the firm did not lay out a timeline for such a move in its filings. But Brendan Ahern, chief investment officer for KraneShares, said it could be forced to delist within the next three years under the U.S. Holding Foreign Companies Accountable Act.

The Hong Kong Stock Exchange has also waived its listing rules for U.S.-listed companies domiciled in China, he said, so a changeover could come sooner. He expects institutional investors and fund managers to convert their American depositary receipts into Hong Kong-class shares in that event.

KraneShares has a suite of Chinese-focused ETFs, but none hold DiDi.

The swap is straightforward for actively managed funds, but passive funds will need to rely on their index provider’s guidelines to determine their next steps based on the listing being moved. For example, FTSE Russell’s methodology allows for a company to be removed from indices if it is no longer listed on any eligible exchange, but MSCI’s corporate event methodology doesn’t necessarily disqualify a company if it’s in the midst of listing elsewhere.

Contact Dan Mika at [email protected], and follow him on Twitter

Dan Mika is a reporter for etf.com. He has previously covered business for the Ames Tribune and Cedar Rapids Gazette in Iowa, and BizWest Media in Fort Collins, Colorado. Dan holds a bachelor's degree in journalism from Truman State University.