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Five Chinese state-owned companies set to leave the New York Stock Exchange

Yahoo Finance Live looks at several Chinese stocks reportedly scheduled to de-list from the NYSE.

Video Transcript

RACHELLE AKUFFO: We're going to be shifting gears now and taking a look at what's happening with five Chinese state-owned companies that are leaving the New York Stock Exchange amid tensions with the US. Now, the companies made their announcement in separate filings to Hong Kong Stock Exchange today. Now, they cited a lack of trades on their US securities and the financial burden of maintaining the listings.

Now, US securities regulators flagged the five companies in May for failing to meet its auditing standards. The companies will officially apply to delist later this month. The last day of trading on the US exchanges will be sometime in September.

And, Akiko, this was something-- we saw the writing on the wall. A lot of these companies were-- this is just five of the biggest, but there are up to 250 more that could delist if DC and Beijing cannot agree on these auditing practices. Because China is saying, look, there are national security issues at stake, the US is like, well, look, you have to meet these auditing standards. So it will be interesting to see the domino effect from here.

AKIKO FUJITA: Yeah, and it's worth backing up to see how we got here, right? I mean, the president signed this bill into law last year, which specifically, by the way, doesn't single out China, but says all foreign companies that are listed in the US have to abide by these accounting standards. And China, for very long, has been the outlier in not wanting their companies to turn over the documents to the US in terms of auditing.

I mean, you mentioned these five companies today, but there are certainly many others that investors, I would argue, are watching even more closely. We're talking about names like Baidu, I mean, they have already been flagged by the SEC. They have a three-year span to be able to comply.

But really, at the end of the day you wonder, is it up to Chinese regulators to decide whether, in fact, these companies can share these documents with US accounting standards or Public Company Accounting Oversight Board-- very long name? And increasingly, it feels like the argument really is that these mega-cap tech companies may be closer to delisting in the US and that they are looking to Hong Kong for their primary listings. We've already seen Alibaba move in that direction, but it's going to be interesting to see how many other companies follow.

RACHELLE AKUFFO: And obviously, in that regulatory statement that you mentioned there, they didn't actually mention the delisting. They said that these companies had their own business reasons for delisting, but you have to figure if they saw the writing on the wall that they were going to potentially get delisted, that they were trying to be proactive about this.

AKIKO FUJITA: Yeah, it's a very tricky balance. And there are conversations happening between the US and China and whether, in fact, China is willing to give on some of those regulatory standards. But a story that, for sure, we'll continue to follow for months.