Multiple Chinese companies have announced plans to delist from the New York Stock Exchange. Thus far, energy giants Sinopec Shanghai Petrochemical Co. (NYSE:SHI), China Petroleum & Chemical Corp (NYSE:SNP), and PetroChina Company Limited (NYSE:PTR), the Aluminum Corporation of China Ltd (NYSE:ACH), and China Life Insurance Co Ltd (NYSE:LFC) are all preparing to apply to delist their American Depository Shares from the NYSE before the end of the month.
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The Latest On The Audit Spat
In May, the U.S. securities regulator flagged all the named companies for failing to meet its auditing requirements. The companies will maintain their listings in Hong Kong and the stock exchanges on China's mainland. The firms are five of the largest state-owned companies in China.
Washington and Beijing have been negotiating in search of a solution for a long-running dispute over the U.S. requirement that regulators be granted access to the books of Chinese firms listed on U.S. stock exchanges.
U.S. regulators have threatened to remove those that don't comply from U.S.-listed exchanges. U.S. lawmakers set a deadline of 2024 for the Chinese companies to comply before they will be removed from U.S. exchanges.
Washington has long demanded access to Chinese firms' books. However, Beijing has always cited concerns about national security for its blocking of foreign regulators from inspecting the audit documents from Chinese accounting firms.
Companies Worth Over $2.4 Trillion
The statements issued by each of the Chinese firms declaring their plans to delist from the New York Stock Exchange did not mention the audit dispute. However, the moves come as tensions between Beijing and Washington heat up further following U.S. Speaker of the House Nancy Pelosi's visit to Taiwan.
The China Securities Regulatory Commission issued a statement saying that the named companies "have strictly complied with the rules and regulatory requirements of the U.S. capital market since their listing in the U.S." It added that the companies "made the delisting choice for their own business considerations."
According to Bloomberg, about 300 China- and Hong Kong-based companies with a market value totaling over $2.4 trillion are at risk of being delisted from U.S. exchanges. In addition to those that have already announced plans to delist from the New York Stock Exchange, Alibaba and Baidu are also among the largest Chinese firms.
Alibaba Could Face Delisting
The U.S. Securities and Exchange Commission added Alibaba Group Holding Ltd (NYSE:BABA) to a growing list of firms that it could delist from U.S. exchanges if Beijing and Washington do not reach an agreement on the audit issue. Alibaba said last month that it was working on securing primary listings in Hong Kong.
The move could help the Chinese conglomerate attract more Chinese investors and set a precedent that other U.S.-listed Chinese companies facing delisting could follow. Alibaba said earlier this month that it would attempt to keep its New York Stock Exchange listing after securing a primary listing on the Hong Kong Stock Exchange.
