Five major Chinese companies listed in the United States announced this Friday, August 12, to withdraw from the New York Stock Exchange, at a time when Beijing firms are in the sights of the American regulator.
A law passed in 2020 in the US Congress requires any company listed in the United States to have its accounts certified by a firm approved by the independent accounting organization PCAOB. In the event of non-compliance with the legislation, companies risk deregistration from 2024.
In this context, the oil behemoths Sinopec and PetroChina indicated on Friday in separate press releases a “ voluntary withdrawal of the New York Stock Exchange, where they are listed. Insurance heavyweight China Life Insurance, Chinese aluminum giant Chalco, and a Shanghai-based subsidiary of Sinopec have announced similar moves.
They all justify this decision by the costs associated with maintaining listings in the United States as well as the burden of meeting audit obligations. The five groups are on a list of companies ordered to comply with accounting obligations by the American market regulator (SEC), and were therefore threatened with eviction from the United States Stock Exchange.
Companies encouraged to seek financing on Chinese stock exchanges
Chinese companies have long been encouraged to finance themselves through IPOs in the United States. In 2014, China’s pioneer of e-commerce Ali Baba had thus raised on Wall Street 25 billion dollars, signing the biggest IPO of all time. But in a context of growing confrontation with Washington, particularly in the technological field, China is now encouraging its nuggets to seek financing on its stock exchanges (Hong Kong, Shanghai, Shenzhen or even Beijing).
Subject to stricter surveillance and restrictions in the United States, many Chinese companies are also opting for a second home stock exchange listing, like the search engine. Baiduor ofAli Baba listed in Hong Kong.
Contrary to many of his compatriots, Didi had nevertheless maintained in June 2021 a fundraiser in the United States. This champion in China of the reservation of cars with driver (VTC), had then collected some 4.4 billion dollars (3.7 billion euros). But the operation had provoked the dissatisfaction of Beijing which feared a transfer of sensitive data to the United States. The Chinese authorities immediately launched an administrative investigation against Didi in connection with his collection of private data.
Didi was eventually fined some 1.2 billion euros last month. The company suffered from the takeover by the Chinese authorities of the tech sector that began in 2020, after a period of laissez-faire in terms of data.
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(with AFP)