Nikkei Asia reported that five Chinese state-backed firms, including the country’s leading energy and chemical company, announced plans on August 12 to delist from the New York Stock Exchange (NYSE).
Five companies, which include China Life Insurance, PetroChina, oil giant Sinopec, Sinopec Shanghai Petrochemical and Aluminum Corporation of China, said in separate statements that they would apply for delistings of their American Depositary Shares (ADS) by the end of this month.
The five cited “low turnover in the U.S.” and “high administrative burden and costs” for the departure.
However, Reuters noted that this move came after the Securities and Exchange Commission had already flagged all five firms in May after failing to meet U.S. auditing standards.
In addition, SCMP reported that another reason for their departure was the escalating tension between the U.S. and China.
Beijing issued on August 5 a list of eight sanctions in response to House Speaker Nancy Pelosi’s recent visit to Taiwan, including termination of 3 U.S.-China military discussion channels, suspension of dialogue on climate-change issues, repatriation of illegal immigrants, criminal justice assistance, counternarcotics, and cross-border crimes.
According to Nikkei Asia, China Life Insurance and Aluminum Corporation of China would file for delisting on August 22, which takes effect 10 days later. Meanwhile, Sinopec and PetroChina would apply for delistings on August 29. These four companies will continue to be listed in Hong Kong and Chinese markets.
In premarket trade on August 12, U.S.-listed shares of China Life Insurance and Sinopec declined 5.7% and 4.3%, respectively. PetroChina shed 4.3%, while Aluminum Corporation of China fell 1.7%. Sinopec Shanghai Petrochemical tumbled 4.1%.
SCMP, citing data from Bloomberg Intelligence in May, reported that about 300 businesses based in China and Hong Kong with over $2.4 trillion in market value are all at risk of being delisted from the New York Stock Exchange.
Giant tech companies such as Alibaba Group Holdings, JD.com, and Baidu, are also on the list.