Five Chinese state-owned companies, under scrutiny in U.S., will delist from NYSE | Taiwan News

SHANGHAI/HONG KONG/NEW YORK, Aug 12 (Reuters) – Five U.S.-listed Chinese state-owned companies whose audits are being scrutinized by the U.S. securities regulator said on Friday they would voluntarily withdraw from the New York stock exchange.

Oil giant Sinopec 600028.SS and China Life Insurance 601628.SS, Aluminum Corporation of China (Chalco) 601600.SS, PetroChina 601857.SS and a separate Sinopec entity, Sinopec Shanghai Petrochemical Co 600688.SS, each said they would seek delisting of their filing US shares this month. They will retain their listings in Hong Kong and mainland China.

In May, the U.S. Securities and Exchange Commission (SEC) reported that the five companies and many others failed to meet U.S. auditing standards. The companies did not mention the dispute in their announcements, which come as tensions rose after US House of Representatives Speaker Nancy Pelosi visited Taiwan.

Beijing and Washington are in talks to resolve a long-running audit dispute that could see Chinese companies banned from U.S. stock exchanges if China doesn’t comply with Washington’s demand for full access to Chinese companies’ books listed in the United States.

Beijing bans foreign inspection of local accounting firms’ audit documents, citing national security concerns.

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

He added that he would maintain “open communication with relevant foreign regulatory agencies”.

The oversight wrangling, which has been simmering for more than a decade, came to a head in December when the SEC finalized rules to potentially ban dealings in Chinese companies under the Foreign Corporate Liability Act. He said 273 businesses were at risk.

Some of China’s biggest companies, including Alibaba Group Holdings BABA.N, Inc 9618.HK, JD.O and Baidu Inc BIDU.O, are among them. New York-listed Alibaba announced last week that it would convert its secondary listing in Hong Kong to a dual primary listing, which analysts say could facilitate the change of primary listing location for the Chinese commerce giant. electronics in the future. Read the full story

U.S.-listed shares of China Life Insurance LFC.N and oil giant Sinopec SNP.N fell 3.06% and 3.22% respectively on Friday. Aluminum Corporation of China ACH.N fell 3.03%, while PetroChina PTR.N lost 2.80%. Sinopec Shanghai Petrochemical Co SHI.N lost 3.29%.

Spokespeople for the NYSE and the Public Company Accounting Oversight Board (PCAOB), the SEC-supervised audit watchdog, declined to comment.


It was unclear what the possible implications of the write-offs were on the negotiations of the audit agreement. Last month, Reuters reported that delisting sensitive companies would not bring China into compliance with US rules because the PCAOB must be able to conduct retrospective inspections. The agency’s position has not changed, a person with knowledge of the matter said Friday. Read the full story

Some market watchers said the write-offs were a bad sign.

“China is sending the message that its patience is running out,” said Kai Zhan, senior counsel at Chinese law firm Yuanda, which specializes in U.S. capital markets.

The companies said their volume of shares traded in the United States was low compared to that of their other major listing places. Still, volume in U.S.-listed stocks for all five companies on Friday was well above their 10-day average.

PetroChina said it has never raised follow-on capital from its U.S. listing and that its bases in Hong Kong and Shanghai “can meet the company’s fundraising requirements.”

Global fund managers with U.S.-listed Chinese stocks are gradually turning to their Hong Kong-listed counterparts, though they still hope the audit dispute will eventually be resolved. Read the full story

“These companies are very thinly traded with a very small U.S. market cap, so it’s not a loss for U.S. capital markets,” wrote Brendan Ahern, CIO of KraneShares, which owns a New York-listed fund focused on Chinese technology, in an e-mail.

He and some analysts said they believe the write-offs could still help pave the way for an audit deal.

“We view this as a positive sign. This aligns with our view that China will decide which companies would be allowed to list in the United States and therefore subject to SEC audit investigations,” Jefferies analysts wrote. .

China Life and Chalco said they would file for delisting on Aug. 22, with the delisting taking effect 10 days later. Sinopec, whose full name is China Petroleum & Chemical Corporation, and PetroChina said their applications would be filed on August 29.

China Telecom 0728.HK, China Mobile 0941.HK and China Unicom 0762.HK were delisted from the United States in 2021 after a Trump-era decision to restrict investment in Chinese tech companies. That decision was left unchanged by the Biden administration amid ongoing tensions.

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