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Two Chinese state airlines announced on Friday they would delist from the New York Stock Exchange (NYSE), adding to a list of state-owned companies withdrawing from US capital markets amid tightened scrutiny by Washington.
China Southern Airlines and China Eastern Airlines said they would voluntarily delist and deregister their American depositary receipts (ADRs) and underlying H shares under the United States Securities Exchange Act, according to separate filings to the Hong Kong stock exchange on Friday evening.
The two companies were the only Chinese state-owned enterprises (SOEs) listed on the NYSE as of September 30, 2022, according to a table compiled by the US-China Economic and Security Review Commission, an American government agency.
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Pedestrians pass the New York Stock Exchange. Photo: Bloomberg alt=Pedestrians pass the New York Stock Exchange. Photo: Bloomberg>
The delistings of two of China's three largest carriers confirmed earlier expectation by analysts that more SOEs would be exiting the world's largest capital market.
Both airlines said they had already submitted their delisting proposals to the NYSE, citing reasons echoing those named by five other SOEs - namely oil giant Sinopec, its entity Sinopec Shanghai Petrochemical and PetroChina, China Life Insurance and Aluminum Corporation of China - when they announced their voluntary removal from the NYSE in August last year.
Those considerations included the limited trading volume of the companies' ADRs as compared with the global trading volume of their H shares, the considerable costs of maintaining the listings of the shares in the US and related obligations, and the fact that they had never utilised the NYSE for any follow-on financing after listings in the US.
The stock exchanges in Shanghai and Hong Kong are strong enough to support the companies' financing needs, the carriers also said.
China Southern Airlines aircraft parked at Urumqi airport, in China's western Xinjiang region. Photo: AFP alt=China Southern Airlines aircraft parked at Urumqi airport, in China's western Xinjiang region. Photo: AFP>
Analysts believe that Beijing has been making decisions on which SOEs should leave US markets, although China's securities watchdog said in August that the delistings of the five SOEs were part of normal market activities and are decisions taken by the companies based on their business needs.