Didi’s stock is up into double digits this week despite rumours that Beijing is considering a proposal to seize control of the beleaguered ride-hailing giant by acquiring a share through government-run companies

Bloomberg reported on Friday, citing unidentified people familiar with the matter, that China’s capital city was considering taking Didi under state control and had proposed that government-run firms invest in it.

Didi, which went public on the New York Stock Exchange in late June, rose 2.4% on Friday, bringing its weekly gain to 9.7%. Despite the regulatory pressure, the stock has lost over half of its value since its IPO. The stock rose 10% last week, according to CNBC.

It’s unclear how state control will affect the ADR structure, which trades on the NYSE instead of regular ordinary stock.

Investors may have lately bought the drop after learning more about Beijing’s policies. Compliance with national rules and regulations, as well as guaranteeing the security of the national network, were two of the primary conditions spelt out by China’s cyberspace authority earlier this week.

The Securities and Exchange Commission is also tightening controls on Chinese companies trying to list on American stock exchanges. The agency stated that it will want further information about the company’s structure as well as any potential risks from future Chinese government measures.

However, Didi said that media reports that the Beijing city government is coordinating companies to invest in it are not correct.

“Didi is currently actively and fully cooperating with cybersecurity probe, foreign media reports that Beijing city government is coordinating companies to invest in it are incorrect,” it said on Weibo.

What you should know?

Bloomberg reported that the state-owned Beijing Tourism Group and other enterprises located in the city will invest in Didi under the early-stage proposal awaiting government clearance. To obtain control of Didi, the group might also take a so-called golden share, which comes with veto power and a seat on the board, according to the newspaper.
Didi is under investigation by China’s Cyberspace Administration, which claims the corporation illegally obtained user data. The ride-hailing behemoth was forced to halt new user registrations, and its app was banned from Chinese app stores.
Last week, the Wall Street Journal reported Didi was considering delisting and compensating investors for losses sustained since its IPO in the United States. Didi later refuted the allegations.