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How to buy Didi Chuxing stock from Canada
Canadian investors may have to get creative to buy into this Chinese listing.
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 Canadian investors can prepare.
Note: all dollar amounts on this page are in US dollars unless otherwise stated.
What we know about the Didi Chuxing IPO
Beijing-headquartered Didi Chuxing is considering a multibillion-dollar IPO on the Hong Kong Stock Exchange (SEHK). 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 Canada
Although Didi Chuxing stock will only be available on Chinese exchanges, Canadian investors can still buy shares. In fact, there are 3 ways Canadian investors can invest in Didi.
1. Use an international brokerage account
Many Canadian brokerages only offer access to Canadian stock exchanges like the TSX. If you plan to buy Didi Chuxing shares, you’ll need an international brokerage account that allows you to buy and sell shares in overseas markets. But, before you open an account, make sure you review your broker’s commissions, exchange rates and potential taxes. Take a look at online brokerages that provide access to international stock exchanges below.
2. Buy shares of companies that have invested in Didi
Although it’s a less direct investment than purchasing Didi Chuxing stocks outright, another option is for investors to back its various investors including Alibaba (NYSE: BABA), Apple (NASDAQ-GS: AAPL), China Life Insurance (NYSE: LFC), Uber (NYSE: UBER) and Tencent Holdings (OTC Markets, Pink Sheets: TCEHY). Many of these are available on US stock exchanges, which are much easier for Canadians to access than overseas exchanges.
3. Buy ETFs
You can also indirectly add Didi Chuxing stocks to your portfolio by investing in exchange-traded funds (ETFs) that track the stock. Once the stock hits the market, keep an eye out for ETFs that add Didi shares to their overall holdings. By purchasing these ETFs, you’ll gain some exposure to Didi Chuxing’s stock.
The following ETFs trade in Canada and already invest heavily in Chinese stocks, so they may be worth watching once Didi shares go live:
- Horizons China High Dividend Yield Index ETF (HCN.TO)
- iShares China Index ETF (TSX: XCH)
- BMO China Equity Index ETF (TSX: ZCH)
- CI ICBCCS S&P China 500 Index ETF Non-Hedged (CHNA-B.TO)
You can buy ETFs from a domestic brokerage account.
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.
Access international stock exchanges (including the SEHK)
To buy stocks, you’ll need to open a brokerage account. Compare your options using the table below to find the best fit for you.
Note: The dollar amounts in the table below are in Canadian dollars.
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