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Chinese state-owned corporations voluntarily assume Wall Street

Five Chinese state-owned companies have announced plans to voluntarily withdraw from Wall Street before the US ousts them in 2024 over an audit dispute, marking an escalation in the financial decoupling of the world’s two largest economies.

The announcements by state groups including PetroChinaAsia’s biggest oil and gas producer, and China Life Insurance Company, one of the country’s largest state-owned insurers, arrive as Beijing and Washington fight for a deal that would see the delisting of about 200 US-listed Chinese companies worth more than $1 trillion would stop .

Other state-owned companies that announced Friday they would delist from the New York Stock Exchange included Aluminum Corporation of China, the country’s largest aluminum producer, China Petroleum & Chemical Corp, or Sinopec, and Sinopec’s petrochemical subsidiary.

The listings have a combined market cap of more than $318 billion, although analysts said the majority of trading in the companies’ shares has already taken place in Hong Kong or mainland China.

“It’s a tactical, political move,” said Dickie Wong, director of research at Kingston Securities in Hong Kong. Wong said other Chinese state-owned companies are likely to be delisted tensions tighten between Washington and Beijing.

“But with private companies like Alibaba, we’ll have to wait and see,” he added.

The US has required Chinese companies and auditors to make their financial audits available for inspection every three years by the Public Company Accounting and Oversight Board, the audit watchdog, or face a trading ban on their US-listed securities.

In a statement released immediately after the delisting announcements, the China Securities Regulatory Commission said the companies in question have “strictly complied with US capital markets rules and regulatory requirements since their listing in the country, and the delisting decisions are out.” their own reasons have been taken commercial considerations”.

Beijing has typically resisted allowing Chinese companies to share data with foreign regulators on national security grounds, but has made some concessions on its privacy rules to prevent the mass delisting. In April, it changed a decades-old rule restricting data-sharing practices by foreign companies.

The Financial Times reported in July that Chinese regulators are considering a categorization system for companies based on the sensitivity of their data, which would result in some voluntary de-listings.

Eugene Weng, a Shanghai-based attorney at law firm Wintell & Co, who represents overseas-listed Chinese companies, said the fact that the delisting announcements came at the same time meant the companies in Beijing had received “the blessing of higher regulators.” have to.

“It’s reasonable that Chinese state-owned companies want to reduce their offshore financial exposure, especially when faced with both tougher enforcement of the Holding Foreign Companies Accountable Act and domestic restrictions on cross-border data transfers,” Weng said.

The PCAOB will issue a statement late next year on whether China has met its audit disclosure requirements. For the jurisdiction to be considered compliant, the regulator must have been able to view the audit records of all of its companies whose securities are traded in the United States.

A former senior official at the US Securities and Exchange Commission said US regulators’ rhetoric on the audit issue had become “loud” recently.

“It’s the kind of language that suggests they know there’s no deal with China and Hong Kong,” the former official said.

https://www.ft.com/content/f16853d1-4a9a-4592-9866-a1a683c39e21 Chinese state-owned corporations voluntarily assume Wall Street

Adam Bradshaw

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