The New York Stock Exchange (NYSE) has announced its decision to delist a unit of China National Offshore Oil Corporation CNOOC Limited next month. This effectively erases one of the most prominent symbols of the Beijing-headquartered Communist Party of China’s embrace of global capitalism from the world’s largest capital market.
CNOOC Limited will stop trading in New York on 9 March to comply with a 20 November executive order by then US President Donald Trump who had banned US investment in companies with purported ties to the Chinese military, as the oil company’s American depositary shares (ADSs) were “no longer suitable” for listing, NYSE said.
“The issuer has the right to a review of this determination by a committee of the board of directors of the exchange,” the NYSE said in a notice on its website after the market closed on Friday.
“The NYSE will apply to the Securities and Exchange Commission (SEC) to delist the issuer’s securities upon completion of all applicable procedures, including any appeal of the NYSE Regulation staff’s decision,” the stock exchange said in the statement.
CNOOC Limited’s spokespeople did not reply to queries for comment till the time of filing of this report. Beijing-based CNOOC Limited had raised $ 15.4 billion in February 2001 on the NYSE in what was then the third-biggest fundraising in the global oil industry.
Following closely China’s official membership in the World Trade Organisation (WTO), economic and political observers had hailed the listing as a symbol of China’s commitment to capital reforms. They had said it would become a trailblazer that would set the pace for subsequent listings by dozens of state-owned companies from banks to telecommunications companies in New York and Hong Kong.
A week after their New York listing, CNOOC’s shares listed in Hong Kong in a HK$ 11.2 billion initial public offering (IPO).
CNOOC’s Hong Kong-listed shares, termed “Red Chips” owing to their state-owned provenance, have been more actively traded than their NYSE counterparts. Daily average turnover of CNOOC’s shares rose to 173.4 million shares in Hong Kong over the past one year — as compared to 199,853 in New York, according to exchange data.
An American depositary receipt of CNOOC is equal to 100 CNOOC shares in Hong Kong.
The NYSE move follows similar delistings this year of three of the biggest telecommunications companies of China: China Mobile, China Telecom and China Unicom. All three CCP government-owned entities maintain their primary listings in Hong Kong while listing their American depositary receipts in New York.
The NYSE had earlier announced its plans to delist the telecommunications companies on New Year’s Day but reversed the decision several times because of some confusion over the scope of the Trump order.
The stock exchange ultimately delisted companies but not before they asked the NYSE to reconsider its decision just hours after Joe Biden officially became the 46th US President.
The Chinese telecommunication companies were among the first targets on Trump’s 12 November executive order. It barred American investors from owning or trading in companies that the US says are Chinese military-owned or PLA-controlled. That initial list has been expanded several times since.
This was one of the series of moves in the last days of the Trump administration that was limiting access by Chinese companies to American capital markets and technology, including adding CNOOC Limited’s corporate parent to the so-called entity list in January. The designation makes it harder for American companies to sell technology and engage in other transactions with the Chinese oil giant.
American investors, including pension funds and university endowments, have until 11 November of this year to fully divest their holdings in any designated Chinese military companies following the executive order.
The Biden administration put a stay on some of the targeted entities in January, thus delaying until 27 May a prohibition on US investments in companies that have similar names to the blacklisted Chinese firms. That ban had been set to be in place on 29 January.
The current Democrat administration in the US was undertaking “complex reviews” of various Trump policies towards China, White House press secretary Jen Psaki had said.
The moves reinforced the expectation that the Biden administration would be more predictable in its dealings with Beijing, although relations remain strained between the world’s two biggest economies.
Nevertheless, in his first call with Xi Jinping earlier this month, Biden pressed the President of China on several issues, including trade and human rights. Further, marking the well-known consistency in American foreign policy across its Republican and Democrat governments, US Secretary of State Antony Blinken has warned that the US would work with allies and partners to hold China accountable on issues threatening regional stability.