Five US-listed Chinese state-owned giant companies, collectively worth hundreds of billions of dollars, have announced they will delist from the US stock exchange amid a decaying market and tensions between Washington and Beijing over regulation and broader political issues.
In a flurry of separate statements on Friday, three of the world’s biggest energy firms, PetroChina, Sinopec and Shanghai Petrochemical, said they would apply for a voluntary delist of their American depository shares (ADS) from the New York Stock Exchange (NYSE).
Two other state-owned giants, the insurer China Life and the aluminum producer Chalco, also announced they would halt offering their shares in the United States, naming the administrative burden and costs related to maintaining the shares as the cause behind their decisions.
Share prices of the companies, whose combined market valuation is more than $300 billion, plummeted in trading in New York on Friday, most by around 1 percent.
The giants, whose audits are under scrutiny by the US securities regulator, will keep their listings in Hong Kong and mainland China, and according to officials and experts, the delistings will have a limited impact on the companies’ operations.
According to China’s market regulator, the moves will not “jeopardize” fund-raising activities by the five companies.
“These companies have strictly complied with the rules and regulatory requirements of the US capital market since their listing in the US and made the delisting choice for their own business considerations,” the China Securities Regulatory Commission (CSRC) said in a statement.
The abrupt moves drew widespread attention amid rising Sino-US tensions and constant Washington’s crackdowns against a wide range of Chinese companies, including a push to potentially delist hundreds of Chinese firms by changing audit rules and in what many call a “financial decoupling”.
Apart from the so-called financial decoupling, the US has also taken a series of provocative actions against China in recent days in many ways, China’s Global Times newspaper said, adding that the hostile measures included signing a chip subsidy act that is intended to cripple China's chip industry.
A number of Chinese financial experts have already warned about the decaying US market, as in a politically charged move, the US has taken gradual steps to intensify requirements for Chinese listed firms to disclose information.
The daily, citied Li Daxiao, chief economist at Shenzhen-based Yingda Securities, as saying on Friday that as the US decides to reject instead of attract more qualified international companies to list in its markets, its market size will get smaller in size, a move that goes against Washington’s wish to hold top position among global capital markets.
“On a smaller scale, the SEC is setting increasingly more hurdles like audit rules or information disclosures for Chinese companies. In a larger sense, the two countries' relations have become increasingly uncertain and it's very likely that listed companies will experience unfair treatment in the US amid such political tensions,” he said.
Furthermore, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told Global Times that it is almost certain that Chinese companies listed in the US would withdraw to avoid risks, as the US market environment is continuing to worsen.
Separately, Gao Lingyun, an expert at the Chinese Academy of Social Sciences (CASS) in Beijing, also told the daily that international investors view the US as a country that no longer has a purely market-oriented financial market, noting that not only Chinese firms but other foreign companies might have second thoughts when considering whether to list in the US.
In addition, she added, many investors in the US and across the world would lose a valid path to invest in high-potential Chinese companies, predicting that more Chinese companies may follow suit and delist from the US markets, particularly if they are large state-owned firms.
“Rather than exposing themselves to constantly rising political risks in the US, it may be a better choice to delist from the US and rearrange their financing approaches, such as going public in Hong Kong, as many suggested,” Gao said.
The development on Friday came as experts noted that if the White House keeps on with its push for a “financial decoupling” between the two countries, it would lead to huge losses for both markets.
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