A crackdown by the Chinese government on companies that choose to go public in the U.S. may put the initial public offerings of dozens of Chinese companies at risk

The suggestion, according to Bloomberg, comes after the Cyberspace Administration of China banned the Didi Chuxing app from app stores in mainland China. Didi Global Inc. was listed on the New York Stock Exchange on June 30 in the biggest float of a Chinese company since Alibaba Group Holding Ltd. in 2014 and the Chinese Communist Party did not approve.

“The Didi situation reinforces the fact that China is annoyed by the flood of U.S. IPOs by Chinese tech companies and is attempting to slow the reception of these IPOs in the West,” Hans Albrecht, portfolio manager at Horizons ETFs Management Canada Inc., told Bloomberg. “While Chinese names look like better value, they will suffer from this overhang for some time.”

The South China Morning Post reported today that the CCP has announced new rules for Chinese companies looking to raise capital on non-Chinese exchanges. The new rules are described as a “sweeping overhaul” to how Chinese companies can raise capital onshore and overseas. The CCP is pitching the new rules as cracking down on financial crimes and misdemeanors in capital markets, including the need to protect data security and transborder data flows.

Although Didi denies sharing data in the U.S., reports in mainland China have suggested that the company was targeted after leaking road and user information ahead of its NYSE IPO.

The crackdown not only hit Didi directly but other Chinese companies listed in the U.S. Shares in Didi dropped 19.6% today, the first day of trading after the Independence Day long weekend, to $12.49 as of the end of regular trading. Didi went public at $15 per share and started trading on debut at $16.65.

Shares in BOSS Zhipin Co. Ltd, listed on the Nasdaq under the name of KANZHUN dropped almost 16% in regular trading while shares in Full Truck Alliance Co. dropped 6.7% on the news that the CCP was investigating both companies. IShares MSCI China ETF, an exchange-traded fund that tracks a basket of Chinese stocks, was down 2.8% Tuesday as well.

The CCP may be officially pitching the crackdown on data security grounds, but the motivation is clearly political and comes amid geopolitical drama between the U.S. and China.

“When you have a U.S. Congress and Senate increasingly united in their stance in suppressing China, this has led to an increasing sense of cautiousness in China about how to defend its own interests,” Yan Yiming, a Shanghai-based lawyer focusing on helping Chinese companies access capital markets, told SCMP.

Image: Didi Chuxing