Several Chinese companies announced Friday the voluntary delisting from the U.S. market causing a drop in the U.S.-listed automakers NIO, XPeng, and Li Auto. As of press time, these companies are trading 2.50%, 4.50%, and 3.45% lower in the Pre-Market session, respectively.
PetroChina, Sinopec, China Life Insurance, Aluminum Corporation of China, and Shanghai Petrochemical Corporation plan to complete the delisting process from the U.S. Market in late August/ early September 2022.
Sinopec said, in a statement, that the decision of the Delisting is based upon a number of considerations including “the small number of underlying H shares represented by the ADSs”.
In addition, the company mentioned also “the considerable administrative burden and cost of maintaining the listing of the ADSs on the NYSE, the registration of the ADSs and the underlying H Shares with the U.S. Securities and Exchange Commission and complying with the periodic reporting and other relevant obligations under the Exchange Act.”
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The China Securities Regulatory Commission commented on the delisting saying listing and delisting are “the norm in the capital market” adding that the “proportion of securities listed in the United States is very small”.
“We have noticed the relevant situation. Listing and delisting are the norm in the capital market. According to the announcement information of relevant companies, these companies have strictly complied with the rules and regulatory requirements of the U.S. capital market since they were listed in the United States, and the choice to delist was made out of their own business considerations.
These companies are listed in many places, and the proportion of securities listed in the United States is very small. The current delisting plan does not affect the company’s continued use of domestic and foreign capital markets for financing development.
The China Securities Regulatory Commission respects the decisions made by enterprises based on their own actual conditions and in accordance with the rules of overseas listing places. We will maintain communication with relevant overseas regulatory agencies to jointly safeguard the legitimate rights and interests of enterprises and investors,” CSRC said.
On August 1, during an interview at Bloomberg’s Washington office, U.S.-PCAOB chair Erica Williams said the U.S.-China talks over audit-paper access are ongoing reiterating the need for complete access.
The chair of the Public Company Accounting Oversight Board said “We need to have complete access” [to the audit papers] adding that PCAOB has teams ‘ready to go” to the country if an agreement is reached, meaning “no loopholes”.
On July 25, China’s Securities Regulator denied a report that said Beijing was working on a 3-tier plan to avoid the delisting of around 260 U.S.-listed Chinese companies. One day earlier, FT had reported Beijing was planning to sort the firms into three different groups considering the sensitivity of the data they hold.
Earlier in the month, Bloomberg reported U.S. Public Company Accounting Oversight Board (PCAOB) and the China Securities Regulatory Commission and the Ministry of Finance held calls with the negotiations “reaching a critical point”. Bloomberg added that the “redactions in auditors’ documents are a key barrier” to reaching a deal.