US-listed China Stocks Slip on Delisting Moves, Analyst Sees Short-term Noise

August 12, 2022 8:52 AM EDT
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Shares of Alibaba (NYSE: BABA) and Pinduoduo (NASDAQ: PDD), as well as several other U.S.-listed China stocks, are down in premarket Friday after several Asian companies said they plan to delist from U.S. exchanges.

China Life Insurance (NYSE: LFC), PetroChina (NYSE: PTR), and China Petroleum & Chemical (NYSE: SNP) all announced plans to delist.

China Life Insurance stated it will delist due to “a number of considerations, including the limited trading volume of its ADSs relative to the worldwide trading volume of its H Shares, and the considerable administrative costs of maintaining the listing of the ADSs on the NYSE, the registration of the ADSs and the underlying H Shares under the Exchange Act and complying with the periodic reporting requirements and related obligations of the Exchange Act.”

The other two companies listed almost the same reasons why they plan to delist. It is yet unknown whether other Chinese companies plan to follow the same path. About 200 Chinese companies are listed in the U.S.

“It’s increasingly clear to Chinese companies that amid the U.S.-China rivalry the U.S. listings of Chinese companies could face the risk of delisting. This has been an overhang on Chinese ADRs. We expect more Chinese firms to voluntarily delist from the U.S. or move their primary listings to Hong Kong,” said GAM Investment Management analyst Jian Shi Cortesi.

He added that the delisting topic “creates short-term noises.”

Daisy Li from EFG Asset Management HK believes today’s moves will impact investor sentiment towards American Depositary Shares (ADRs).

“These come backs are within expectation as ADRs of Chinese SOEs see very low trading volume in the US and many foreign funds cannot invest in them,” Li added.

By Senad Karaahmetovic

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