With Chinese companies in the crosshairs of US regulators, five US-listed Chinese conglomerates announced their withdrawal from Wall Street on Friday.
In fact, legislation passed by Congress in 2020 requires every company listed in the United States to have its accounts certified by an accredited firm. At the risk of committing a breach in the event of non-compliance from 2024 and being delisted from the American stock exchange. But Mainland China and Hong Kong companies are notorious for not going through this process, and some prefer to take the lead…
The first to operate this “voluntary withdrawal” from the New York Stock Exchange, where they are listed, are two giants of the US, according to their separately released press releases Oil, Sinopec and PetroChina. The heavyweight ofChinese life insurancethe Chinese giant ofChalco aluminumand a subsidiary of Sinopec based in Shanghai, announced similar moves.
All base this decision on the costs associated with maintaining listings in the United States and the burden of complying with auditing obligations.
For its part, the Chinese financial market regulator justified these decisions by saying that they were reacting “business considerations”.
Above all, the legal framework for Chinese companies is becoming more and more complicated, these five groups are on a list of companies that have been asked by the American market regulator (SEC) to comply with accounting requirements.
Foreign listings are no longer funded
Chinese companies have long been encouraged to fund themselves through IPOs in the United States. In 2014, Chinese e-commerce pioneer Alibaba raised $25 billion on Wall Street, its biggest IPO ever.
But due to the growing rivalry with Washington, especially in the technology sector, China is now encouraging its nuggets to fund themselves on its stock exchanges (Hong Kong, Shanghai, Shenzhen or even Beijing).
Under tighter surveillance and restrictions in the United States, many Chinese companies are also choosing to list their second homes on the stock exchange, such as Hong Kong-listed search engine Baidu or Alibaba.
Didi keeps his listing in the United States and receives a fine from Beijing
Unlike many of his compatriots, Didi had maintained fundraising in the United States in June 2021. This champion of car-with-driver (VTC) reservations in China had raised around $4.4 billion at the time. But the operation had angered Beijing, which feared sensitive data might be transferred to the United States. The Chinese authorities promptly launched an administrative investigation into Didi in connection with his collection of private data. Didi was eventually fined around €1.2 billion last month.
The company suffered from the Chinese authorities’ takeover of the tech sector, which began in 2020, after a period of laissez-faire on the data.