Three Chinese giants leave the NY stock exchange
China’s three state-owned enterprise giants announced plans to remove their shares from the New York Stock Exchange on Friday, further increasing the financial divide between the world’s largest economies. in the context of a dispute over corporate audit oversight.
PetroChina Ltd., China Life Insurance Ltd. and China Petroleum & Chemical Co. no mention of the audit dispute or US-China tensions over Taiwan, security, technology and human rights.
The companies, in similarly worded statements issued within 30 minutes of each other, cited the small trading volume of their shares in New York. They said the shares would still be traded in Hong Kong, which is open to non-Chinese investors.
Washington has warned Chinese companies including Alibaba Group, the world’s largest e-commerce company, could be forced out of US stock exchanges if Beijing refuses to let regulators view the records of their corporate auditors.
US authorities say other governments have agreed to that step, which is required by US law, and that China and Hong Kong are the only two parties. China says talks are making progress, but US officials say important issues remain unresolved.
Americans were also barred by then-US President Donald Trump’s November 2020 order from investing in stocks, bonds and other securities in dozens of companies cited by the Pentagon as potentially supportive. China’s military development. The three companies that announced their exit from the US market on Friday are not on that blacklist.
Friday’s announcement follows moves by Chinese companies to increase Hong Kong’s role in connecting them with foreign investors.
China’s largest ride-hailing service, Didi Chuxing, left the New York Stock Exchange on June 10 and joined the Hong Kong exchange. In July, Alibaba announced plans to upgrade the status of shares traded in Hong Kong to make them accessible to mainland investors.
PetroChina, China Life and China Petroleum & Chemical, known as Sinopec, said the affected securities were US custody shares, or ADS, which represents shares traded in Hong Kong. They said Hong Kong shares would still be traded.
China’s securities regulator said its decision to leave the US stock market was “based on its own commercial considerations.” In a brief statement, it promised to “maintain contacts” with foreign regulators to “jointly protect the legitimate rights and interests of businesses and investors.”
PetroChina cites the cost of complying with the rules in many stock markets.
Exchanges in Hong Kong and Shanghai are “strong alternatives” that can “meet the company’s fundraising requirements,” PetroChina’s announcement said.
Private companies including Alibaba have raised billions of dollars on U.S. exchanges because they largely do not operate within the Chinese financial system, which serves state-owned companies.
Foreign stock exchanges are less important to state-owned companies. Stocks traded in China or Hong Kong typically represent the majority of their market value.
The New York Stock Exchange announced plans in January 2021 to end trading in shares of China’s three main state-owned phone carriers at the behest of Trump. The exchange temporarily withdrew the plan but later said evictions would proceed.