Five Chinese firms announced plans to delist from the U.S. stock exchange this Friday. This creates attention to triggering diplomatic-economic tension between the two economically well-sustained states, China and the U.S.
China Life Insurance and the Aluminum Corp. of China, considered economic giants, have declared their voluntary delisting from the New York Stock Exchange market. China-owned energy firms, including PetroChina, China Petroleum and Chemical, and Shanghai Petrol Chemical, recently put forward in each of their separate statements that they will soon step away from the U.S. stock market, addressing the administrative burden and costs associated with maintaining the shares.
The reason for this delisting is considered to be the strict regulation and continuous check on these firms imposed by the Congress legislation in 2020. All these companies were already made part of the Holding Foreign Companies Accountable Act (HFCAA) earlier this May. These companies were considered as the units that do not meet the American Regulating Standards. The tension remains the same despite all the negotiations between the Beijing and U.S. stock markets.
After the staggering statements flashed across the trading market, China’s top stock regulator, the China Securities Regulatory Commission, issued a statement emphasizing that the companies’ decisions were based on their commercial considerations and economic concerns and that it would facilitate contact with relevant overseas governing agencies to jointly safeguard the legitimate rights & interests of both investors and companies.
The current situation in the stock exchange market on Friday showed clear signs of an increasing number of China-owned firms delisted from the U.S. stock market, resulting in a serious loss in the U.S in the upcoming years.
According to the chief economist of Yingda Securities, the delisting of the companies rather the attracting global companies will further lead to a shrink in the size of the largest stock market in the world. The New York stock market.
Experts like Gao Lingyun of the Chinese Academy of Social Sciences (CASS) in Beijing said in his statements that the U.S. cannot be considered as well established market-oriented financial market anymore because of the current situation prevailing. The analyst also considers this situation to worsen further, as the other companies may have second thoughts about the Ney York Stock Exchange market. He also estimated that other large forms chose to delist from the U.S., especially after witnessing this turbulence in the stock market.
The HFCAA act and its audit rules on companies not only break economic ties but also create a condition of diplomatic distress resulting in uncertainty about the future of both countries.