(Boursier.com) — Five of China’s largest state-owned companies will leave Wall Street as Beijing and Washington have still not reached an agreement allowing US regulators to inspect the audits of Chinese companies. China Life Insurance, PetroChina, China Petroleum & Chemical, Aluminum Corp of China and Sinopec Shanghai Petrochemical have successively announced their intention to exit the US stock market. Mainland China and Hong Kong are the only two jurisdictions in the world that do not allow inspections by the Public Company Accounting Oversight Board, with officials citing national security and privacy concerns.
The US and China have been at odds for two decades over allowing US inspectors access to Chinese companies’ audit working papers, ‘Bloomberg’ recalls. As officials from both sides attempt to reach a compromise (the US Congress has set a deadline of 2024), speculation is mounting that a solution could involve companies Beijing deems sensitive voluntarily exiting US markets. “These public companies belong to strategic sectors and are known to have access to information and data that the Chinese government may be reluctant to give access to foreign regulators,” explains Redmond Wong, strategist at Saxo Markets.
The China Securities Regulatory Commission said in a statement that the delisting plans were based on the companies’ commercial concerns. About 300 companies based in China and Hong Kong – with a market capitalization of more than $2.4 trillion – are at risk of being forced off US stock exchanges as the Securities and Exchange Commission (SEC) steps up scrutiny of affected companies. On July 29, the SEC added Alibaba to this growing list of companies that could exit the world’s largest stock exchange.