Five Chinese state-owned companies are delisted in New York
FIVE CHINESE STATE COMPANIES WILL BE DELISTED IN NEW YORK
SHANGHAI/HONG KONG (Reuters) – Five Chinese state-owned companies including China Life Insurance and oil giant Sinopec announced plans on Friday to delist from the New York Stock Exchange amid diplomatic tensions and economic growth with the United States.
The companies, including Aluminum Corporation of China (Chalco), PetroChina and Sinopec Shanghai Petrochemical, said in separate statements that they would seek redemptions of their New York Stock Exchange-listed shares.
These five companies were added to the US regulator’s list in May for failing to comply with the Federal Foreign Business Accountability Act (HFCAA).
They will maintain their listings in the Hong Kong and Mainland China markets.
Beijing and Washington are in talks to resolve a long-standing dispute that could result in Chinese companies being delisted from US stock exchanges if they fail to comply with local audit regulations.
“These companies have strictly adhered to the rules and regulatory requirements of the US financial market since their listing in the United States and have chosen to delist for their own business considerations,” the China Securities Regulatory Commission (CSRC) said in a press release.
Some of China’s largest companies, including Alibaba, JD Com and Baidu, are among some 270 listed companies at risk of delisting.
Alibaba announced plans in July to make the Hong Kong Stock Exchange its main listing market alongside Wall Street, becoming the first major company to benefit from a regulatory change.
“CHINA AT THE END OF PATIENCE”
In premarket trading on Friday, Wall Street-listed shares of China Life Insurance and oil giant Sinopec fell 5.7% and 4.3%, respectively. Aluminum Corporation of China lost 1.7%, PetroChina lost 4.3% and Sinopec Shanghai Petrochemical 4.1%.
“China is sending a message that it is running out of patience in the audit talks,” said Kai Zhan, senior adviser at Chinese law firm Yuanda, which specializes in US markets and compliance.
Washington has long demanded full access to the books of Chinese companies listed in the United States, but Beijing has banned foreign access to local accounting firms’ audit records, citing national security concerns.
The companies also clarified that the volume of their securities traded in the United States was small compared to their other major listings.
PetroChina said it has never raised additional capital from its US listing and its Hong Kong and Shanghai markets “can meet the company’s fundraising needs” while ensuring “better protection of investors’ interests.”
China Life and Chalco said they would apply for a delisting on August 22, which will take effect 10 days later. Sinopec and PetroChina will submit their applications on August 29.
China Telecom, China Mobile and China Unicom were delisted in the United States in 2021 after Donald Trump’s administration decided to limit investment in Chinese tech companies.
(Reporting Samuel Shen in Shanghai, Scott Murdoch in Hong Kong and Medha Singh in Bangalore; French version Kate Entringer, edited by Jean-Stéphane Brosse)