SHANGHAI/HONG KONG, Aug 12 (Reuters) – Five Chinese state-owned companies, including oil giant Sinopec (600028.SS) and China life insurance (601628.SS)said on Friday it would delist from the New York Stock Exchange amid economic and diplomatic tensions with the United States.
The companies, which also include Aluminum Corporation of China (Chalco) (601600.SS)PetroChina (601857.SS) and Sinopec Shanghai Petrochemical Co. (600688.SS)each said they would apply to delist their American Depository Shares this month.
The five, which were singled out by the US securities regulator in May for failing to meet its auditing standards, will remain listed on the Hong Kong and mainland Chinese markets.
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Beijing and Washington are in talks to resolve a long-running audit dispute that could see Chinese companies banned from US exchanges if they fail to comply with US rules.
Washington has long demanded full access to the books of US-listed Chinese companies, but Beijing bars foreign inspection of local accounting firms’ audit documents, citing national security concerns.
There was no mention of the audit dispute in separate statements from Chinese companies describing their moves, which came amid heightened tensions after the US House Speaker’s visit to Taiwan last week. Nancy Pelosi.
“These companies have strictly complied with the rules and regulatory requirements of the US capital market since their listing in the US and chose delisting for their own business considerations,” the Capital Markets Regulatory Commission said. China Securities (CSRC) in a statement.
The agency added that it would maintain “open communication with relevant foreign regulatory agencies.”
The oversight row, which has been simmering for more than a decade, came to a head in December when the Securities and Exchange Commission (SEC) finalized rules to potentially ban trading in Chinese companies under the Act. of Responsibility of Foreign Companies. He said 273 companies were at risk.
Some of China’s biggest companies, including Alibaba Group Holdings, JD Com Inc and Baidu Inc, are among them. Alibaba said last week it would convert its Hong Kong secondary listing to a dual primary listing that analysts say could pave the way for the Chinese e-commerce giant to switch main listing locations in the future. read more
In premarket trading on Friday, shares of US-listed China Life Insurance and oil giant Sinopec fell 5.7% or 4.3%, respectively. Aluminum Corporation of China fell 1.7%, while PetroChina lost 4.3%. Sinopec Shanghai Petrochemical Company 4.1%.
As a NYSE spokesman, he declined to comment. The adviser to the Public Company Accounting Oversight Board, the audit watchdog overseen by the SEC, had no immediate comment.
LOSING PATIENCE?
Market watchers were divided on what the delistings could mean for the audit deal, with some saying it was a bad sign.
“China is sending a message that its patience is running out in the audit talks,” said Kai Zhan, a senior adviser at the Chinese law firm Yuanda, which specializes in US capital markets.
The companies said their volume of shares traded in the US was small compared to those of their other major listing venues.
PetroChina said it had never raised follow-on capital from its US listing and that its bases in Hong Kong and Shanghai “can meet the company’s fundraising requirements” as well as provide “better protection of the interests of investors”.
Global fund managers that hold U.S.-listed Chinese shares are steadily shifting toward their Hong Kong-listed peers, even as they hold out hope that the audit dispute will eventually be resolved, Reuters reported this week. read more
“These companies are very thinly traded with a very small US market capitalization, so it is not a loss for the US capital markets,” he wrote in an email.
He and analysts said the exclusions could pave the way for China to comply with US requirements, as the five companies involved are likely to have sensitive information that China would not want exposed in an audit review.
“We view this as a positive sign. This is consistent with our view that China will decide which companies will be able to list in the United States and thus be subject to SEC audit investigations,” Jefferies analysts wrote in a statement. note.
China Life and Chalco said they would apply for delisting on August 2. 22, entering into force 10 days later. Sinopec, whose full name is China Petroleum & Chemical Corporation, and PetroChina said their applications would be filed on August 1. 29
Chinese telecommunication (0728.HK)Chinese Mobile (0941.HK) and ChinaUnicom (0762.HK) they were delisted from the United States in 2021 after a Trump-era decision to restrict investment in Chinese tech companies. That ruling has not been changed by the Biden administration amid ongoing tensions.
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Reporting by Samuel Shen in Shanghai, Scott Murdoch in Hong Kong, and Medha Singh in Bangalore; additional reporting by Michelle Price and Echo Wang; Edited by Hugh Lawson, David Goodman and Alexander Smith
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