Five Chinese state-owned companies, including oil giant Sinopec, have opted for delisting from the New York Stock Exchange instead of being audited by Washington.
- Chinese state-owned companies should be delisted from the New York Stock Exchange after disputes over US audit regulations
- Washington has warned more than 270 Chinese companies that they could be removed from the New York Stock Exchange if Beijing continues to reject regulations
- Beijing says foreign examination of audit documents from domestic accounting firms, which is required by US regulations, is a national security concern
- Disagreements arise amid growing tension between the two global economies, including Nancy Pelosi’s recent trip to Taiwan
Five Chinese state-owned companies announced on Friday that they would remove their names from the New York Stock Exchange amid a refusal to comply with US audit regulations and rising tensions between the two global economies.
Washington has warned more than 270 Chinese companies, such as the Alibaba Group, that they could be removed from exchanges if Beijing continues to reject regulations, according to a report by ABC News.
Beijing cites foreign examination of audit documents from domestic accounting firms as a national security concern, which has led to disagreement over regulations.
All five companies were identified in May as not complying with US regulators’ audit standards, which required regulators to see the companies’ auditors’ records.
PetroChina Limited, China Life Insurance Limited and China Petroleum & Chemical did not mention the differences between the two countries over Taiwan, after the recent trip of US House Speaker Nancy Pelosi raised tensions, in their decision to remove from the list.
Oil giant Sinopec announced on Friday that it will be removed from the New York Stock Exchange after it rejected audit regulations by the United States
Disagreements arise amid growing tension between the two global economies, including Nancy Pelosi’s recent trip to Taiwan
As the first female speaker of the House of Representatives to visit Taiwan since 1997, according to a report by NPR, Pelosi has continued her campaign to defend Taiwan’s democracy and criticize China.
Within hours of Pelosi’s arrival, China ordered live-fire exercises at six different locations near Taiwan, restricting airspace and water paths throughout the region.
The five companies, including Sinopec Shanghai Petrochemical Co., Ltd. and Aluminum Corporation of China, that it will continue to maintain its listing in the Hong Kong and mainland Chinese markets.
“These companies have scrupulously complied with the regulatory rules and requirements of the US capital market since their listing in the United States and made the delisting option for their own business considerations,” the China Securities Regulatory Commission said in a statement.
All companies cited small trading volumes for each of their stocks on the New York Stock Exchange. The decision to move to Hong Kong will allow each company to be open to non-Chinese investors.
After the announcement and on Friday, Sinopec stock fell 4.3 percent. China Life Insurance fell 5.7 percent. China Aluminum Co. fell 1.7 percent. PetroChina shares fell 4.3 percent. Sinopec Shanghai Petrochemical shares fell 4.1 percent.
Sinopec opened its primary market listing on Friday after dropping 4.3 percent
The biggest drop among the five companies to be written off is a 5.7 percent drop for China Life Insurance
China Life and Aluminum Corp will file a delisting application on August 22, which will take effect 10 days later on September 1. Sinopec and PetroChina will follow on August 29, with entry into force on September 8.
When threatening to be de-listed, Alibaba said last week it would convert its secondary Hong Kong listing to a primary dual listing, which analysts say could facilitate the e-commerce company to allow mainland investors access to the shares.
Among the former China-based companies to be removed from the list are China Telecom, China Mobile and China Unicom.
The trio was delisted in 2021 after a Trump-era decision to restrict investment in Chinese tech companies, a decision that has remained unchanged by the Biden administration.