Joe MacDonald
Associated Press Business Writer
BEIJING (AP) — Three Chinese state-owned giants announced on Aug. 12 that they planned to withdraw their shares from the New York Stock Exchange, intensifying corporate audits among the world’s largest economy.
PetroChina Co., China Life Insurance Co. and China Petroleum & Chemical Corporation made no mention of audit disputes or U.S.-China tensions over Taiwan, security, technology and human rights.
The companies issued similarly worded statements within 30 minutes, saying their shares traded lightly in New York. Shares will still be traded in Hong Kong, which is open to non-Chinese investors, they said.
Washington has warned that Chinese companies, including Alibaba Group Holding, the world’s largest e-commerce company, could be forced to leave U.S. stock exchanges if Beijing refuses to let regulators look at the records of its corporate auditors.
U.S. authorities say other governments have agreed to the step, which is required by U.S. law, with China and Hong Kong the only opponents. China said the talks were making progress, but U.S. officials said important issues had not been resolved.
In November 2020, an order from then-President Donald Trump also barred Americans from investing in stocks, bonds and other securities of dozens of companies the Pentagon believed could support China’s military development. The three companies that announced their withdrawal from the U.S. market are not on the blacklist.
The announcement comes as Chinese companies are increasing Hong Kong’s role in connecting foreign investors.
Didi Chuxing, China’s largest ride-hailing service, left the New York Stock Exchange and joined the Hong Kong Stock Exchange on June 10. Alibaba announced in July plans to upgrade the status of its Hong Kong-listed shares to give mainland investors access to them.
PetroChina, China Life Insurance and China Petrochemical Corporation (Sinopec) said the affected securities were American depositary shares (ADS) representing shares traded in Hong Kong. Hong Kong stocks will still trade, they said.
Chinese securities regulators said their decision to leave the U.S. stock market was “based on their own business considerations.” In a brief statement, it pledged to “maintain communication” with foreign regulators to “jointly safeguard the legitimate rights and interests of businesses and investors.”
PetroChina cited the cost of complying with the rules in multiple stock markets.
The PetroChina announcement said the Hong Kong and Shanghai exchanges were “strong options” that could “meet the company’s funding requirements.”
Private companies, including Alibaba, have raised billions of dollars on U.S. exchanges because they are largely excluded from the Chinese financial system that serves state-owned companies.
Foreign stock exchanges have less impact on SOEs. Stocks traded in mainland China or Hong Kong typically account for the majority of their market value.
The New York Stock Exchange announced plans to terminate trading in shares of China’s three major state-owned phone carriers in January 2021 under Trump’s order. The exchange temporarily withdrew the plan, but later said the evictions would continue.
