Chinese state-owned firms to delist from NYSE

Shanghai/Hong Kong/Bengaluru — Five Chinese state-owned firms including China Life Insurance and oil giant Sinopec said on Friday they would delist from the New York Stock Exchange, amid heightened diplomatic and economic tension with the US.

The companies, which also include Aluminium Corporation of China (Chalco), PetroChina and Sinopec Shanghai Petrochemical Co, said in separate statements that they would apply for delistings of their American Depositary Shares from later in August.

The five, which were added to the Holding Foreign Companies Accountable Act (HFCAA) list in May after they were identified as not meeting US regulators’ auditing standards, will keep their listings in Hong Kong and mainland Chinese markets.

There was no mention of the auditing row in separate statements by the Chinese companies outlining their moves, which come amid heightened tensions after last week's visit to Taiwan by US House of Representatives Speaker Nancy Pelosi.

Beijing and Washington have been in talks to resolve a long-running dispute that could mean Chinese firms being kicked off US exchanges if they do not comply with US audit rules.

“These companies have strictly complied with the rules and regulatory requirements of the US capital market since their listing in the US and made the delisting choice for their own business considerations,” the China Securities Regulatory Commission (CSRC) said in a statement.

Some of China’s largest companies including Alibaba Group Holdings, JD Com and Baidu are among almost 270 on the list and at threat of being delisted.

Alibaba said last week it would convert its Hong Kong secondary listing into a dual primary listing which analysts indicated could ease the way for the Chinese e-commerce giant to switch primary listing venues in the future.

In premarket trade Friday, US-listed shares of China Life Insurance and oil giant Sinopec fell 5.7% about 4.3% respectively. Aluminium Corporation of China dropped 1.7%, while PetroChina shed 4.3%. Sinopec Shanghai Petrochemical Co shed 4.1%.

“China is sending a message that its patience is wearing thin in the audit talks,” said Kai Zhan, senior counsel at Chinese law firm Yuanda, who specialises in areas including US capital markets and US sanction compliance.

Washington has long demanded complete access to the books of US-listed Chinese companies, but Beijing bars foreign inspection of audit documents from local accounting firms, citing national security concerns.

The companies said their US traded share volume was small compared with those on their other major listing venues.

PetroChina said it had never raised follow-on capital from its US listing and its Hong Kong and Shanghai bases “can satisfy the company’s fundraising requirements” as well as providing “better protection of the interests of the investors”.

China Life and Chalco said they would file for delisting on Aug. 22, with it taking effect 10 days later. Sinopec and PetroChina said their applications would be made on August 29.

China Telecom, China Mobile and China Unicom were delisted from the US in 2021 after a Trump-era decision to restrict investment in Chinese technology firms. That ruling has been left unchanged by the Biden administration amid continuing tensions.

Reuters