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How to buy Didi Chuxing stock in the US

There are three ways for American investors to nab a slice of this Chinese listing.

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Our pick to buy Didi Chuxing stock: Interactive Brokers

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Chinese ride-hailing platform Didi Chuxing has abandoned its pursuit of a US IPO in favor of premiering on the Hong Kong Stock Exchange. Here’s how US investors can prepare.

What we know about the Didi Chuxing IPO

Beijing-headquartered Didi Chuxing is considering a multibillion-dollar IPO on the Hong Kong Stock Exchange. The ride-hailing platform is among the most popular in the country, backed by the likes of Alibaba, Softbank and Tencent.

The IPO is expected to launch in the first half of 2021, according to Reuters.

The company may pursue another private fundraising round ahead of its IPO to further bolster its valuation. In 2017, the company was worth $56 billion and it’s tentatively targeting a $60 billion valuation for its IPO launch.

Some reports suggest Didi Chuxing initially eyed US markets for its IPO, but amid growing political tensions between China and the US, the company withdrew its interests and plans to go public on a Chinese exchange instead.

The good news is that US investors should be able to buy in — though perhaps not as directly as they’d like. Here’s how American investors can prepare.

How to invest in Didi Chuxing from the US

Although Didi Chuxing’s stock will only be available on Chinese exchanges, there are three ways American investors can invest in the company.

1. Use an international brokerage account

Most US brokerages only offer access to major US stock exchanges, like the NYSE and Nasdaq. But there are a few brokers equipped to fascilitate international trade, like Charles Schwab, Fidelity and Interactive Brokers.

Before you sign up, review your broker’s commissions, exchange rates and potential taxes. Most important of all: make sure the platform you’re interested in offers access to the international exchange you want to trade on. This information can typically be found on a broker’s website.

Our pick: Interactive Brokers

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2. Buy ETFs

You can indirectly add Didi Chuxing stock to your portfolio by investing in exchange-traded funds (ETFs) that track the stock. Once Didi Chuxing’s stock goes live, look for ETFs that add its shares to their overall holdings. By purchasing these ETFs, you’ll gain indirect exposure to Didi Chuxing’s stock.

The following ETFs specialize in Chinese stocks, so keep an eye on them once Didi Chuxing’s stock is released to see if they add its shares to their holdings:

  • iShares MSCI China ETF
  • Renaissance Capital’s International IPO ETF
  • SPDR S&P China ETF

You can buy ETFs from a domestic brokerage account.

3. Wait for an ADR

Another way to gain portfolio exposure to Didi Chuxing’s stock is to wait for the company’s American Depository Receipt (ADR) to reach the US. ADRs are certificates representing shares of foreign stock. Like ETFs, they can be purchased from a domestic brokerage account.

There’s no guarantee that Didi Chuxing will release an ADR, so investors will need to keep their ears open for news of the company’s plans for US investors.

Didi Chuxing’s balance sheet

Didi Chuxing was founded in 2012 and is headquartered in Beijing, China. It operates as a mobile transportation platform, offering a variety of services that include ride-hailing, ride-sharing, bike-sharing and more. It serves over 10 billion passengers annually across China, Japan, Australia, Russia and Latin America.

In 2016, Didi acquired Uber China, partnered with TripAdvisor and broke records by offering over 11 million private-car rides and 14 million orders in a single day.

While we’ve yet to see a public statement from the company on the matter, sources suggest Didi generated a healthy profit in Q2 2020. As more information is released ahead of its IPO, investors will have the opportunity to learn more about the company’s balance sheet.

How are similar companies performing?

While no guarantee of performance, here’s how some of Didi Chuxing’s competitors have fared:

Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.

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