Five Chinese state-owned companies, including oil giant Sinopec, have opted to be DELISTED from the NYSE rather than be audited by Washington
- Chinese state-owned companies are delisted from the New York Stock Exchange after disputes over US audit rules
- Washington has warned over 270 Chinese companies could be expelled from the NYSE if Beijing continues to resist regulations
- Beijing says foreign inspection of audit documents from local accounting firms, required by US regulations, poses a national security issue
- Disputes arise amid rising tensions between the two world economies, including Nancy Pelosi’s recent trip to Taiwan
Five Chinese state-owned companies announced on Friday they would delist from the New York Stock Exchange due to a refusal to comply with US auditing rules and growing tensions between the two global economies.
According to a report by ABC News, Washington has warned over 270 Chinese companies like Alibaba Group could be delisted if Beijing continues to resist regulations.
Beijing cites foreign inspection of audit records from local accounting firms as a national security issue, prompting the dispute over the regulations.
All five companies were found in May to fail to meet US regulators’ auditing standards, which require regulators to see company auditors’ records.
PetroChina Ltd., China Life Insurance Ltd. and China Petroleum & Chemical Co. made no reference to disputes between the two countries over Taiwan in their decision to remove them, after a recent trip by US House Speaker Nancy Pelosi sparked tensions.
Oil giant Sinopec announced on Friday it would delist from the New York Stock Exchange after rejecting US audit regulations
Disputes arise amid rising tensions between the two world economies, including Nancy Pelosi’s recent trip to Taiwan
As the first House Speaker to visit Taiwan since 1997, Pelosi continued her campaign to champion Taiwan’s democracy and criticize China, according to NPR.
Within hours of Pelosi’s arrival, China ordered live fire drills at six different locations near Taiwan, restricting airspace and waterways in the region.
The five companies, including Sinopec Shanghai Petrochemical Co. and Aluminum Corporation of China, announced they will maintain listings in Hong Kong and mainland China.
“These companies have strictly adhered to the rules and regulatory requirements of the US capital market since their listing in the US, and have chosen to delist for their own business considerations,” the China Securities Regulatory Commission said in a statement.
All companies each named their respective small trading volumes of their shares on the NYSE. A decision to move to Hong Kong would allow any company to open up to non-Chinese investors.
Following the announcement and premarket Friday, Sinopec fell 4.3 percent; China Life Insurance fell 5.7 percent; Aluminum Corporation of China fell 1.7 percent; PetroChina fell 4.3 percent; and Sinopec Shanghai Petrochemical Co. fell 4.1 percent.
Sinopec opened its premarket listing on Friday after falling 4.3 percent
The biggest drop among the five companies to be delisted is a 5.7 percent drop in China Life Insurance
China Life and Aluminum Corp. will file for delisting on August 22nd, effective 10 days later on September 1st. Sinopec and PetroChina will follow on August 29, with the delisting taking effect on September 8.
Facing the risk of being delisted, Alibaba said last week that it would convert its Hong Kong secondary listing to a dual primary listing, which analysts said could give the e-commerce company easier access to shares for mainland investors.
Previous China-based companies set to be delisted include China Telecom, China Mobile and China Unicom.
The trio were delisted in 2021 following a Trump-era decision to restrict investment in Chinese tech companies, a decision unchanged by the Biden administration.