Five of China’s biggest state-owned companies, representing hundreds of billions of dollars in market value, will delist from the New York Stock Exchange in coming weeks, the firms said in a flurry of filings on Friday.
Three of the world’s biggest energy firms, PetroChina, Sinopec and Shanghai Petrochemical, said in separate statements that they would apply for a voluntary delisting of their American depositary shares. Two other state-owned giants, the insurer China Life and the aluminum producer Chalco, also said they would stop offering their shares in the United States, citing the administrative burden and costs related to maintaining the shares.
The companies’ share prices fell in trading in New York on Friday, most by around 1 percent. Together, the companies have a combined market valuation of more than $300 billion.
They made their announcements amid rising tensions between Beijing and Washington, and greater scrutiny of Chinese companies listed in the United States since Congress passed legislation introducing stricter oversight of these firms in 2020.
American lawmakers have long complained that Chinese companies do not play by the same rules as other companies on U.S. stock exchanges. Despite years of discussions, Beijing and Washington have failed to strike an agreement that would give American regulators access to fully inspect the audit papers of U.S.-listed Chinese businesses.
A listing on Wall Street, with its deep investor base and liquid market, was once seen as a coveted position for China’s biggest companies and an important step for those aspiring to go global.
But tensions between China and the United States have spilled over into nearly every aspect of the relationship between the two countries, from defense to climate and finance. A contentious trip last week by Speaker Nancy Pelosi to Taiwan, which China has claimed as its own, has further inflamed the relationship. Hours after her visit, Beijing halted talks on military coordination, climate change and other issues.
China’s market regulator said the moves would not “jeopardize” fund-raising activities by the five firms, adding that they can choose from multiple markets. The companies will keep their listings in Hong Kong and mainland China.
“These companies have strictly complied with the rules and regulatory requirements of the U.S. capital market since their listing in the U.S. and made the delisting choice for their own business considerations,” the China Securities Regulatory Commission said in a statement on Friday.
All five companies were added to a list of Chinese firms that did not meet the auditing standards of U.S. regulators, outlined in the Holding Foreign Companies Accountable Act that was passed in 2020.
Alibaba, the Chinese e-commerce giant listed in New York, is another firm that was recently added to the list of more than 270 companies. When news of its addition emerged this month, its U.S.-listed shares dropped 11 percent. The company said last month that it would soon seek a primary listing in Hong Kong, a move that would allow more investors from mainland China to invest in it.
Didi Chuxing, China’s answer to Uber, was among the first Chinese companies to announce plans to delist from the New York Stock Exchange late last year, signaling the end of a multiyear, trillion-dollar love affair between China and Wall Street.
Source: New York Times