DiDi Global Forecast: DIDI stock advances 32% on continued China risk repricing

UPDATE: The China risk re-pricing is continuing on Friday. Shares of DiDi Global (DIDI), which is called DiDi Chuxing in China, rocketed 32% higher to $3.39 about 90 minutes into the session. It appears that Wednesday's announcement from the central government that foreign listings would be supported has greatly boosted confidence in American Depository Receipts. When the original announcemnt came down, Great Hill Capital Chairman Thomas Hayes told Yahoo Finance, "A day ago or a week ago, if you had asked money managers, what's the least thing that you'd like to own in your portfolios, they would have all said 'China.'" Now, however, the entire US market seems to be deciding that Beijing can be trusted. DIDI stock is up 86% since the government's change of stance.

DiDi Global stock (DIDI) joined a stampede of other US-listed Chinese shares on Wednesday that rallied as if they were penny stocks. DIDI shares closed 41.7% higher at $2.55 after the Chinese government announced a very public about-face on the regulatory scrutiny it has used to batter homegrown tech stocks since late 2020. The Communist Party government said they were prepared to support foreign-listed stocks – the very policy that has sent DIDI's US shares down by a large degree.

DiDi Global Stock News: Will China support the US listing?

The Financial Stability & Development Committee of the State Council's statement was only released in Mandarin, and what has been translated appears fairly general. The government will now make a more resolute decision to support capital markets, work with the US Securities & Exchange Commission to keep Chinese companies in compliance with securities laws and also also come to the aid of Chinese real estate companies that have fallen into precarious financial positions. As China has reduced its economic growth outlook for the year and sees the headwinds caused by the Russian invasion of Ukraine affecting world markets, this new regulatory attitude may be an attempt to reinforce the Chinese economy amidst uncertain times.

DiDi, the Uber of China, has dropped continuously since its debut on the New York Stock Exchange last June. Even with Wednesday's +40% explosion, shares are still down 82% from the initial public offering at $14. This downfall began when the government demanded that DiDi unlist just one day after its US listing. The plan was to relist in Hong Kong, but a government agency put a stop to that move on March 11, saying that DiDi's policy on data security fell short of requirements.

The announcement of a new attitude by Chinese regulators caused a complete reassessment of the entire Chinese tech sector. The Golden Dragon China Index, which covers all Chinese equities listed in the US, rose nearly 33% on Wednesday. At the time of writing, DIDI shares are down 2.4% in the premarket, so it may be that the market is uncertain whether this rally can continue. Most importantly, it is uncertain if China will permit DIDI to keep its US listing or not. If not, then DiDi shareholders will soon be back where they started.

DIDI key statistics

DiDi Stock Forecast: Targeting key resistance levels at $4.50 and $5.50

DIDI stock closed on Wednesday at $2.55. It has resistance above Wednesday's close at both the 20-day and 50-day moving averages on the daily chart. The 20-day moving average is at $3.61 and the 50-day moving average is at $4.04. Additionally, the Relative Strength Index (RSI) was boosted off a ledge at 20 and ended the session at 36. It will need to cross the 50 threshold to ensure that this rally is a longer-term phenomenon. 

The most important price targets are resistance at $4.50 and $5.50. The lower price level acted as resistance twice in mid-February, the higher price level presented resistance once in mid-January. Above $4.50, DIDI stock is neutral. Above $5.50, it is back in bull mode.

DIDI 1-day chart