Five state-owned Chinese companies will delist from the New York Stock Exchange

In separate statements issued on Friday, China Life Insurance, PetroChina, Sinopec, Aluminum Corporation of China and Sinopec Shanghai Petrochemical said they had notified the NYSE and applied for “voluntary listing”.

All five companies cited “low turnover in the US” and “high administrative burden and costs” as reasons for their departure.

However, the news comes after all five were flagged by the US Securities and Exchange Commission in May, according to Reuters, for failing to meet US auditing standards.

China’s securities watchdog, the China Securities Regulatory Commission, said on Friday that it was aware of the situation and that it was “normal for companies to list or delist from any market.”

“We will liaise with foreign regulatory bodies and protect the rights of corporations and investors together,” it said.

Increase verification

The news comes as the Securities and Exchange Commission ramps up its audits of Chinese companies.

Commission can The company kicked off Stock exchanges if they fail to allow the US watchdog to audit their finances for three years. China has been around for years rejected US audit of its companies.

Chinese companies that do business overseas are required to keep their audit documents in mainland China, where they cannot be audited by foreign firms.

But in April, China’s securities watchdog proposed changes to a decade-old rule that prohibits Chinese companies from sharing sensitive data and financial information with foreign regulators. amendment can Allows US regulators to inspect audit reports of Chinese companies listed in New York.

However, companies like Alibaba are taking steps to prepare for the potential downside of direct access to US capital markets.

The Securities and Exchange Commission in late July has been added Alibaba has been included in a list of more than 150 companies that could face expulsion if they fail to pass audit inspections over the next three years, joining some of China’s biggest companies such as JD.com and Baidu.

Before the commission added Alibaba to its watch list, the company announced it would seek an initial listing on the Hong Kong stock exchange.

Currently, Alibaba has a secondary listing on the Hong Kong Stock Exchange.

“An initial listing status in Hong Kong gives Chinese ADRs (American Depository Shares) an option to diversify their listing risk and maintain access to the public equity market” if they are forced to leave the US, Goldman Sachs analysts said. A recent report.

If the transition goes smoothly for Alibaba, it could “set the path” for many other Chinese ADRs to follow a similar switch, Citi analysts said.