CSRC: Solution to delisting issue depends on talks

Any progress made by the China-US audit and supervision cooperation mechanism can determine whether or not certain US-listed Chinese companies will be delisted from the US stock market over the next two years, the China Securities Regulatory Commission said in a media interview on Thursday.

The CSRC said that the US Securities and Exchange Commission saying some US-listed Chinese companies may have failed to meet US audit requirements is a normal process under the US Holding Foreign Companies Accountable Act.

SEC Chairman Gary Gensler said in an interview with Bloomberg on Tuesday that there have been "considerate, respectful and productive conversations" between the Chinese and US authorities concerned.

Aware of Gensler's latest statement, the Chinese top securities watchdog recalled in the Thursday interview that CSRC Chairman Yi Huiman had held three video conferences with Gensler since August last year, aiming to solve the residual problems related to the audit and supervision cooperation between China and the United States.

The two sides will continue to communicate as both are willing to resolve differences and overcome problems. But the outcome of their efforts will be determined by the "wisdom and original intentions" of both parties, said the CSRC.

The SEC on Wednesday added five Chinese companies－securities brokerage Futu Holdings Ltd, tech giant Baidu, video platform iQiyi, CASI Pharmaceuticals and fisheries firm Nocera－to a growing list of companies that may get delisted from the US stock exchanges.

The five companies need to demonstrate before April 20 that they have met the audit requirements and should not be delisted. Or else, they will likely be delisted from the US exchanges in 2024.

This is the third batch of Chinese companies facing delisting risk since the beginning of March. In all, 11 US-listed Chinese companies have been identified by the SEC as entities that failed to comply with the HFCAA.

The HFCAA was enacted in late 2020. Companies from the Chinese mainland can be delisted from the US exchanges if they are found to have not complied with audit requirements of the Public Company Accounting Oversight Board for three consecutive years, according to the Act.

Nasdaq-listed Futu saw its price fall by nearly 3 percent on Wednesday and Baidu's price declined 2.61 percent.

Also traded on the Hong Kong stock exchange, Baidu fell more than 3 percent on Thursday while the local benchmark Hang Seng Index shed more than 1 percent.

Responding to the developments, Futu said it has been monitoring the requirements closely and is aware of the potential influence of the HFCAA.It said it has been actively exploring plans to remain listed in the US.

Baidu, known for its online search engine and artificial intelligence ventures in China, has not made any statement so far. But, in late March last year, the technology giant had listed in Hong Kong as well.

The total market value of the US-listed Chinese companies came in at $1.58 trillion, which was 46.4 percent less than that in late 2020, according to investing information platform Gelonghui Technology Development.