Five Chinese state-owned companies, including the country’s top energy and chemical company, opted out of the New York Stock Exchange by the end of August.
In separate statements issued Friday, China Life Insurance, PetroChina, Sinopec, Aluminum Corporation of China and Sinopec Shanghai Petrochemical said they had notified the NYSE and requested “voluntary delisting.”
All five companies cited “low turnover in the US” and “high administrative burdens and costs” as reasons for leaving.
However, the news comes after all five were flagged by the US Securities and Exchange Commission in May, according to Reuters, for failing to meet US auditing standards.
China’s securities regulator, the China Securities Regulatory Commission, said on Friday that it is aware of the situation and that “it is normal for companies to list or exit any market.”
“We will liaise with foreign regulatory institutions and protect the rights of corporations and investors together,” he said.
Audit process
The news comes as the Securities and Exchange Commission ramps up its audit process of Chinese companies.
The commission can kick companies out of the stock exchange if they don’t allow US watchdogs to inspect their financial audits for three consecutive years. China has for years rejected US audits of its companies.
Chinese companies that are traded abroad are required to keep their audit documents in mainland China, where they cannot be scrutinized by foreign agencies.
But in April, China’s securities regulator proposed changing a decade-old rule that bars Chinese companies from sharing sensitive data and financial information with foreign regulators. The amendment could allow US regulators to inspect audit reports from Chinese companies listed in New York.
However, companies like Alibaba are taking steps to prepare for a potential loss of direct access to US capital markets.
At the end of July, the Securities and Exchange Commission (U.S. Securities and Exchange Commission) has added Alibaba to a list of more than 150 companies that could face expulsion if their audits cannot be inspected within the next three years, joining some of China’s biggest companies such as JD. com and Baidu.
Even before the commission added Alibaba to its watch list, the company announced that it would seek a primary listing on the Hong Kong stock exchange.
Alibaba currently has a secondary listing on the Hong Kong Stock Exchange.
“A primary listing status in Hong Kong gives Chinese ADRs (American Depository Shares) an option to diversify their listing risk and maintain access to the public equity market” if they are forced to leave the United States, Goldman Sachs analysts said. in a recent report.
If the transition goes smoothly for Alibaba, it could “set the path” for many other Chinese ADRs to pursue a similar move, Citi analysts said.
Source: CNN Brasil
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