Sunday, September 25, 2022
 
Columnist
Martin Hennecke

Big 5's NYSE exit may lead to exodus of state firms
 
15/08/2022
 
<p>More Chinese state-owned enterprises under the scrutiny of the United States securities regulator are expected to follow five of their peers and delist from the New York Stock Exchange, signaling a worsening Sino-US relationship.</p><p>Oil giants PetroChina (0857), Sinpoec (0386), Sinopec Shanghai Petrochemical (0338), Aluminium Corporation of China (2600) and China Life Insurance (2628) announced on Friday that they would apply to delist their American depository shares this month.</p><p>&quot;China is sending a message that its patience is wearing thin,&quot; said Kai Zhan, senior counsel at Chinese law firm Yuanda, who specializes in US capital markets.</p><p>In May, the US Securities and Exchange Commission flagged the five companies and many others as failing to meet US auditing standards.</p><p>The companies did not mention the dispute in their announcements, which come as tensions mounted after US House of Representatives Speaker Nancy Pelosi visited Taiwan.</p><p>Beijing and Washington are in talks to resolve a long-running audit dispute which could result in Chinese companies being banned from US exchanges if China does not comply with Washington&#39;s demand for complete access to the books of US-listed Chinese companies.</p><p>The companies said their US traded share volume was small compared with those on their other major listing venues.</p><p>Everbright Securities International&#39;s securities strategist Kenny Ng Lai-yin said it is possible that more US-listed Chinese state firms will leave as the delisting of the five shows that Beijing is not willing to give up its interests, but negotiations between China and the US on the issue will be more decisive in the future.</p><p>Despite a decline of about 3 percent in the US on Friday, Ng said the shares of the five companies might only slightly drop or even remain stable in Hong Kong today as the proportion of stock listed in the US is small.</p><p>The US SEC said 273 Chinese companies risk being delisted according to rules which potentially prohibit trading in Chinese companies under the Holding Foreign Companies Accountable Act. They include other state-owned companies like CNOOC (0883) and China Southern Airlines (1055).</p>

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