Chinese Companies Delisting off the NYSE

According to a December 2021 article from the New York Times, dozens of Chinese companies publicly traded on the N.Y.S.E. may be delisted over the course of the next three years because of ongoing disputes over audit transparency in Chinese and Hong Kong-based accounting firms.

The United States and China have been arguing about the audit issue for roughly more than a decade since the 2011 meeting and agreements signed by President Barack Obama and President Hu Jintao.

At issue are audit standards for publicly traded companies.

The Securities and Exchange Commission currently has the authority to delist The Securities and Exchange Commission currently has the authority to delist companies that do not have approved overseas audits. The Public Company Accounting Oversight Board (the “PCAOB”) has thus far been unable to fully inspect the audit papers and other documents of accounting firms in China and Hong Kong. These pending audits will affect the listings of such entities as Didi Rideshare and more than 190 other companies in a similar situation.

The aforementioned accounting firms have signed audit reports for nearly 200 publicly listed companies on the N.Y.S.E.. Those companies all run the similar risk of being delisted if the transparency requirements of the PCAOB are not met. The potentially non-compliant audit reports account for a combined global market capitalization of $1.9 trillion.

China is increasingly willing to trade on the Hong Kong exchange and leave the American markets indefinitely. At the start of 2021, China Telecom, China Unicom, China is increasingly willing to trade on the Hong Kong exchange and leave the American markets indefinitely. At the start of 2021, China Telecom, China Unicom, and China Mobile were delisted by the N.Y.S.E. to comply with an executive order that barred Americans from investing in companies with ties to the Chinese military. This and the recent delisting of Didi indicates that investors in the US will have to risk Chinese fiscal oversight regulations and less transparency if they want to invest in the companies now listed exclusively on the Hong Kong Stock Exchange.