China-US political and trade tensions have been on the rise for several years. The news of imposing sanctions against each other regarding security, technology, and human rights is also quite old. Moreover, the Taiwan issue has recently been added. Besides, the dispute regarding the audit verification of the organization has been brought forward. In this situation, five state-owned Chinese Corporate Giants have announced the removal of shares from the New York capital market. It is being hailed as the latest addition to the growing financial divide between the world’s two largest economies. The article contains Five Chinese Corporate Giants Left New York’s Stock Market.
Three of the world’s largest energy companies, PetroChina, Sinopec, and Shanghai Petrochemical, said in separate statements that they will apply for voluntary delisting of their shares in the US capital market in a short time. In addition, two other state-owned corporate giants, China Life Insurance and Aluminum Corporation of China Limited, have announced their withdrawal from the US capital market. The energy giants did not cite any reasons, though the two companies cited administrative burdens and costs associated with share maintenance.
Meanwhile, the share price of the companies fell in the New York stock market. Most organizations have a drop rate of around 1 percent. The combined market value of the companies is more than 30 trillion dollars. The firms said the Hong Kong stock market will continue to trade and is open to investors from outside China. In doing so, the companies have followed the steps of other Chinese companies. As a result, it is increasing Hong Kong’s role in connecting with foreign investors.
However, Washington has warned that US capital markets will leave if Beijing refuses to allow access to corporate audit records of Chinese firms, including Alibaba Group, one of the world’s largest e-commerce companies. The US authorities said that the governments of other countries have agreed to this step because it is required by US law. However, China and Hong Kong refused to accept this step. Although China is progressing in talks on the issue, US officials say essential issues remain unresolved.
In November 2020, then-US President Donald Trump’s administration banned investment in the stocks, bonds, and other securities of dozens of companies believed to support China’s military development. However, the companies that have announced the withdrawal of shares from the US capital market are not on the black list. For example, earlier on June 10, China’s largest ride-hailing service DD left the New York stock market and joined the Hong Kong stock market.
China’s market regulator said the move would not jeopardize the fundraising activities of institutions. In this case, firms can choose multiple markets. In a statement, the China Securities Regulatory Commission said the institutions have strictly complied with capital market rules and regulatory requirements since listing in the United States. Currently, companies are exiting the country’s capital markets considering business requirements.
The five companies were added to a list of Chinese firms that did not meet regulators’ audit standards in the Holding Foreign Companies Accountable Act passed in 2020. Chinese firms said the number of shares traded in the US was lower than in other major capital markets. PetroChina said the company did not raise additional capital from the US listing. Moreover, Hong Kong and Shanghai capital markets, known as bases, can meet the fundraising requirements of the institution.
China Life and Chalco said on August 22 that the companies would apply for the withdrawal of the two listings. It will be effective after ten days of application. Besides, Sinopec and PetroChina announced to apply on August 29. In 2021, the New York Stock Exchange suspended the trading of China Telecom, China Mobile, and China Unicom trading after the Donald Trump administration restricted investment in Chinese companies. However, the Joe Biden administration has kept that decision unchanged amid tensions between the two largest countries.
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