Five Chinese state-owned companies to be delisted from the NYSE

SHANGHAI/HONG KONG, Aug 12 (Reuters) – Five Chinese state-owned firms including China Life Insurance ( 601628.SS ) and oil giant Sinopec ( 600028.SS ) said on Friday they would delist from the New York Stock Exchange, amid increased diplomatic and economic tensions with the United States.

The companies, which also include Aluminum Corporation of China (Chalco) ( 601600.SS ), PetroChina ( 601857.SS ) and Sinopec Shanghai Petrochemical Co ( 600688.SS ), said in separate statements that they would apply to delist their U.S. depositary Shares from later this month.

The five, which were added to the Holding Foreign Companies Accountable Act (HFCAA) list in May after they were identified as not meeting US regulators’ auditing standards, will retain their listings in Hong Kong and mainland China.

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There was no mention of the audit series in separate statements from the Chinese companies outlining their moves, which come amid heightened tensions following last week’s visit to Taiwan by US House Speaker Nancy Pelosi.

Beijing and Washington have been in talks to resolve a long-running dispute that could see Chinese firms kicked off U.S. exchanges if they fail to comply with U.S. auditing rules.

“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 choice of delisting for their own business reasons,” the China Securities Regulatory Commission (CSRC) said in a statement.

Some of China’s biggest companies including Alibaba Group Holdings, JD Com Inc and Baidu Inc are among nearly 270 on the list and are at risk of delisting.

Alibaba said last week it would convert its secondary listing in Hong Kong to a dual primary listing, which analysts indicated could ease the way for the Chinese e-commerce giant to switch primary listings in the future. Read more

In premarket trading on Friday, US-listed shares of China Life Insurance and oil giant Sinopec were down 5.7%, around 4.3%. Aluminum Corporation of China fell 1.7%, while PetroChina fell 4.3%. Sinopec Shanghai Petrochemical Co fell by 4.1 per cent.

“China is sending a message that its patience is running out in the revision negotiations,” said Kai Zhan, senior adviser at Chinese law firm Yuanda, which specializes in areas including US capital markets and compliance with US sanctions.

Washington has long demanded full access to the books of US-listed Chinese companies, but Beijing rules out foreign inspection of audit documents by local accounting firms, citing national security concerns.

The companies said their U.S. traded stock volume was small compared to that of their other major listings.

PetroChina said it had never raised follow-on capital from its U.S. IPO, and its Hong Kong and Shanghai bases “can satisfy the company’s fundraising requirements” as well as provide “better protection of investors’ interests.”

China Life and Chalco said they would apply for delisting on August 22, with it taking effect 10 days later. Sinopec and PetroChina said their filings would be filed on Aug. 29.

China Telecom (0728.HK), China Mobile (0941.HK) and China Unicom (0762.HK) were delisted from the United States in 2021 following a Trump-era decision to limit investment in Chinese technology companies. That decision has been left unchanged by the Biden administration despite continued tensions.

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Reporting by Samuel Shen in Shanghai, Scott Murdoch in Hong Kong and Medha Singh in Bengaluru; Editing by Hugh Lawson, David Goodman and Alexander Smith

Our standards: Thomson Reuters Trust Principles.

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