SHANGHAI/HONG KONG, Aug 12 (Reuters) – Five Chinese state-owned enterprises, including China Life Insurance and oil giant Sinopec, announced plans on Friday to halt their listings on the New York Stock Exchange amid increased diplomatic and economic tensions with the United States.
The companies, including Aluminum Corporation of China (Chalco), PetroChina and Sinopec Shanghai Petrochemical, said in separate statements they would seek delisting of their shares listed on the New York Stock Exchange.
These five companies were added to the US regulator’s list in May for non-compliance with the federal Foreign Business Accountability Act (HFCAA).
They will retain their listings on the Hong Kong and mainland China markets.
Beijing and Washington are in talks to resolve a long-running dispute that could see Chinese companies barred from US stock exchanges if they fail to comply with local auditing rules.
“These companies have strictly complied with the rules and regulatory requirements of the US financial market since their listing in the United States and have chosen to delist due to their own business considerations,” said the China Securities Regulatory Commission ( CSRC) in a press release.
Some of China’s biggest companies, including Alibaba, JD Com and Baidu, are among the roughly 270 companies listed and at risk of delisting.
Alibaba announced plans in July to make the Hong Kong Stock Exchange its main listing market, in addition to Wall Street, becoming the first major company to benefit from a regulatory change.
“CHINA AT THE END OF PATIENCE”
In pre-market trading on Friday, Wall Street-listed shares of China Life Insurance and oil giant Sinopec fell 5.7% and 4.3% respectively. Aluminum Corporation of China lost 1.7%, while PetroChina lost 4.3% and Sinopec Shanghai Petrochemical 4.1%.
“China is sending a message that its patience is running out in the audit talks,” said Kai Zhan, senior adviser at Chinese law firm Yuanda, who specializes in US markets and compliance.
Washington has long demanded full access to the books of Chinese companies listed in the United States, but Beijing bans foreign inspection of the audit documents of local accounting firms, citing national security concerns.
The companies also clarified that the volume of their securities traded in the United States was low compared to that of their other main listing venues.
PetroChina said it had never raised additional capital from its U.S. listing and that its Hong Kong and Shanghai markets “can meet the company’s fundraising requirements”, while ensuring “better protection of investors’ interests”.
China Life and Chalco said they would file for delisting on August 22, to take effect 10 days later. Sinopec and PetroChina will file their applications on August 29.
China Telecom, China Mobile and China Unicom were delisted in the United States in 2021 after a decision under Donald Trump’s administration to restrict investment in Chinese technology companies. (Reporting Samuel Shen in Shanghai, Scott Murdoch in Hong Kong and Medha Singh in Bangalore; French version Kate Entringer, edited by Jean-Stéphane Brosse)