CASE STUDY 2: DIDI'S IPO WAS A DISASTER. HERE'S WHY CHINESE COMPANIES KEEP LISTING IN THE US On Tuesday, shares in Didi crashed 20% after Chinese authorities opened an investigation into the ridehailing giant that raised $4.4 billion last week in a massive IPO in New York. The botched IPO is bad news for investors. It's also bad for the New York Stock Exchange, which has been caught up in a campaign by US politicians who want to prevent Chinese companies from raising money in New York. The political fallout was swift. Sen. Marco Rubio, a Republican from Florida who is highly critical of the Chinese government, told the Financial Times that it was "reckless and irresponsible" for Didi to be allowed to sell shares. "Even if the stock rebounds, American investors still have no insight into the company's financial strength because the Chinese Communist party block US regulators from reviewing the books," Rubio told the UK newspaper. "That puts the investments of American retirees at risk and funnels desperately needed US dollars into Beijing." The political atmosphere around listings of US companies has been charged for months. Former President Donald Trump signed a law in November that bans Americans from investing in firms that the US government suspects are either owned or controlled by the Chinese military. That forced US exchanges to delist several Chinese companies, including China Mobile, China Telecom and China Unicom. President Joe Biden has followed the same path, expanding restrictions on US investment into Chinese companies with suspected military ties. The big question: Given the political backdrop, why do Chinese companies continue to pursue US listings? Analysts say there are several advantages to listing in New York: Superior liquidity A massive investor base Streamlined listing process For Chinese tech companies, a US listing is even more attractive because American investors are used to dealing with startups. And US exchanges accept a wider range of valuation methodologies.