© Indian Punchline
In a flurry of statements on Friday against the backdrop of escalating US-China tensions,
five of China's biggest state-owned companies announced their intent to delist from the New York Stock Exchange — PetroChina Co Ltd, China Life Insurance Co, China Petroleum & Chemical Corp, Aluminium Corp of China and Sinopec Shanghai Petrochemical Co. which represent over 300 billion dollars in market cap.
As of August 2022, the market cap of these Chinese giants are as follows: PetroChina ($132.11 billion); China Life Insurance ($94.88 billion); China Petroleum & Chemical Corp ($70.23 billion). Aluminium Corp of China ($10.29 billion) is also the world's second-largest alumina producer and third-largest primary aluminium producer; and, Sinopec Shanghai Petrochemical Co.($3.77 billion) is a subsidiary of Sinopec (market cap: $68.45 billion), and is one of the largest petrochemical enterprises in China..
At work here primarily is a greater scrutiny of Chinese companies listed in the United States that the American regulators are insisting upon since the Congress' legislation passed in 2020 during the Trump administration in this direction. The legislation followed the failure of protracted negotiations for the American regulators to gain full access to inspect the audit papers of US-listed Chinese businesses,
which Beijing views as "crackdowns" on Chinese companies and as "financial decoupling."Both in terms of the market cap of the New York Stock Exchange as a whole (which currently stands at $26.2 trillion) and in terms of American depository shares in the five Chinese companies, this development per se is not earthshaking but has implications.
Will it bring a bad name to the New York Stock Exchange? Maybe, eventually. Will it seriously impact on the Chinese companies' operations? Unlikely. (For example, American depository shares in PetroChina represented approximately 0.45 percent of the total share capital of the company.)
Nonetheless, it is a signpost that will be noted in financial markets, even as a
growing number of Chinese firms are also positioning to delist from the US markets. Interestingly, the 2020 US legislation also includes a push to delist US-listed companies by changing audit rules. The US Securities and Exchange Commission has put 159 Chinese concept stock companies (companies that operate in China) on its delisting watch-list as of end-July.
Comment: In recent months there have been a number of incidents that reflect Africa's growing confidence in rejecting US diktats, and its likely that this threat will only catalyze their pivot to the East:
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