What are Chinese companies that withdraw from Wall Street and what are they doing
Five Chinese state-owned companies anticipated delisting from the New York Stock Exchange. Here are reasons, numbers and context
Five Chinese state-owned companies today announced plans to withdraw their listings from the New York Stock Exchange in the US, the world's largest stock exchange by trading volume, by the end of the month.
THE FIVE COMPANIES THAT WILL LEAVE THE NEW YORK STOCK EXCHANGE
The delisting plans were anticipated in separate releases by the insurance company China Life Insurance, the aluminum producer Aluminum Corporation of China (Chalco), the oil companies Sinopec and PetroChina and the petrochemical company Sinopec Shanghai Petrochemical.
They specified that they will remain listed on the Hong Kong stock exchange and those in mainland China.
REGULATORY DISPUTES
The China Securities Regulatory Commission, the Chinese government authority that regulates the securities market, said that "these companies have strictly complied with the rules and regulatory requirements of the American financial market since their listing in the United States and have chosen delisting based on to their own commercial evaluations ".
In May, the five companies were added to a sort of "black list" because they do not comply with American auditing regulations: a 2020 law, called the Holding Foreign Companies Accountable Act, obliges companies listed in the United States to declare that they are not owned or controlled by the Chinese government.
WILL ALIBABA, BAIDU AND JD.COM BE NEXT?
The list also includes technology companies Alibaba Group, JD.com and Baidu. Alibaba recently said it will convert its secondary listing in Hong Kong into a double primary listing – a technical move that analysts say could facilitate any future maneuvers to change the group's primary listing.
In 2021, three Chinese telecommunications companies – China Telecom, China Mobile and China Unicom – withdrew their listings in the United States.
THE DELISTING DATES
The five companies that announced the withdrawal from the New York Stock Exchange made no direct mention of these regulatory disputes. However, they have specified – each of the five – that their volumes of shares traded in the United States are reduced when compared to those on the other major exchanges on which they are listed.
China Life and Chalco said they will apply for delisting on August 22: the withdrawal will take effect after ten days. Sinopec and PetroChina will instead apply on 29 August.
THE OPINION OF THE ANALYST
Kai Zhan, an analyst at Chinese law firm Yuanda, told Reuters that, through the five delisting announcements, China "is sending a message indicating that its patience is running out in audit talks," meaning regulators, with the United States.
Washington authorities want full access to the books of Chinese companies listed in the United States. Beijing, on the other hand, prevents foreign entities from inspecting the audit documents of domestic companies, motivating this policy with the protection of national security.
HOW DO THE ACTIONS GO
Today, in the premarket , shares of China Life and Sinopec listed in the United States fell by 5.7 and 4.3 percent, respectively. Those of Chalco lost 1.7 percent, those of PetroChina 4.3 and those of Sinopec Shanghai Petrochemical 4.1.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/cinque-societa-cinesi-delisting-borsa-new-york/ on Fri, 12 Aug 2022 13:07:53 +0000.