Delisting Five Chinese State-Owned Companies in New York – 08-12-2022 15:25

Five Chinese state-owned companies to be delisted in New York

SHANGHAI/HONG KONG (Reuters) – Five Chinese state-owned companies, including insurance company China Life and oil giant Sinopec, announced plans on Friday to end their listing on the New York Stock Exchange, amid diplomatic tensions and economic growth with the United States.

The companies, including China Aluminum Corporation (Calco), PetroChina and Sinopec Shanghai Petrochemical, said in separate statements that they would seek to delist their shares listed on the New York Stock Exchange.

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 Hong Kong and mainland China markets.

Beijing and Washington are in talks to resolve a long-running dispute that could lead to Chinese companies being banned from US exchanges if they fail to comply with local audit rules.

“These companies have strictly adhered to the regulatory rules and requirements of the US financial market since their US listing and opted for delisting due to 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 about 270 listed companies at risk of delisting.

Alibaba in July announced plans to make the Hong Kong stock exchange its main market for listing, as well as Wall Street, becoming the first major company to benefit from a regulatory change.

‘China is at the end of patience’

In pre-market trading on Friday, Wall Street-listed shares of China Life Insurance and oil giant Sinopec fell 5.7% and 4.3%, respectively. China Aluminum lost 1.7%, while PetroChina lost 4.3% and Sinopec Shanghai Petrochemical lost 4.1%.

“China is sending a message that it is running out of patience in the audit talks,” said Kai Zhan, a senior advisor 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 bans foreign inspections of audit documents for domestic accounting firms, citing national security concerns.

The companies also indicated that the volume of securities traded in the US was low compared to other major listing places.

PetroChina said it has not raised additional capital from its US listing and that its Hong Kong and Shanghai markets “can meet the company’s fundraising requirements”, while ensuring “better protection of investor interests”.

China Life and Chalco said they will file a delisting request on August 22, to be effective 10 days later. Sinopec and PetroChina will submit their orders on August 29.

The US companies China Telecom, China Mobile and China Unicom were delisted in 2021 after a decision under the Donald Trump administration to restrict investment in Chinese technology companies.

(Reporting by Samuel Sheen in Shanghai, Scott Murdoch in Hong Kong, and Medha Singh in Bangalore; French version by Kate Enteringer; Editing by Jean-Stefan Bruce)

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