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Five Major Chinese Firms To Delist From New York Stock Exchange

Five Major Chinese Firms To Delist From New York Stock Exchange

Five major Chinese companies including two of the country’s largest oil producers will delist from the New York Stock Exchange, the firms said in filings on Friday.

Sinopec and PetroChina — two of the world’s biggest energy firms — will apply for “voluntary delisting” of their American depositary shares, the companies said in separate statements.

The Aluminum Corporation of China, also known as Chalco, as well as China Life Insurance and a Shanghai-based Sinopec subsidiary, announced similar moves.

The delisting plans come as tensions between Beijing and Washington climb over US House Speaker Nancy Pelosi’s visit last week to Taiwan, which China claims as part of its territory.

Beijing has raged against the visit, staging unprecedented military drills around the self-ruled island and suspending cooperation with the United States on issues ranging from climate change to fighting drug smugglers.

The five companies are on a list of firms published by the US Securities and Exchange Commission that faced delisting from Wall Street if they did not comply with new audit requirements.

All five companies said in separate statements that they expected to stop trading on the NYSE by early September.

The new requirements came into effect late last year, at a time when Chinese authorities were expressing reservations about China-based companies listing in the United States.

The five companies on Friday all pointed to the costs of maintaining the US listings as well as the burden of complying with reporting obligations as factors behind the decision.

China’s securities regulator on Friday said the moves were made by the companies “out of their own business considerations”.

The delistings “will not affect the companies’ continued use of domestic and foreign capital markets for financing and development”, the regulator said in a statement.

Delisting fears

The US Congress in 2020 passed a law specifically targeting Chinese companies under which the Public Company Accounting Oversight Board (PCAOB) must be able to inspect audits of foreign firms listed on US markets.

Mainland Chinese and Hong Kong companies are notorious for not submitting their financial statements to US-approved auditors.

The law therefore puts them at risk of delisting, and its implementation comes at a time when Chinese authorities have expressed reservations in recent months about China-based companies listing in the US.

Chinese e-commerce giant Alibaba is among the latest batch of firms added to the list of more than 250 companies at risk of delisting under the rules.

The market heavyweight saw its Hong Kong stocks sink earlier this month after it was put on the list, dragging the Hang Seng Tech Index with it.

In leaving the US market, Chinese companies are giving up an investor base like no other in the world — with $52.5 trillion in assets under management, compared to $7.1 trillion in China, according to a 2020 study by management consulting firm McKinsey and Company.

AFP

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UK’s Truss defends economic plan that sent pound tumbling

UK’s Truss defends economic plan that sent pound tumbling

British Prime Minister Liz Truss on Thursday defended her economic plan and shrugged off the negative reaction from financial markets, saying she’s willing to make “difficult decisions” to get the economy growing.

In her first public comments since the government’s announcement of billions in uncosted tax cuts roiled markets and drove the pound to record lows, Truss said Britain was facing “very, very difficult economic times.” But she said the problems were global and spurred by Russia’s invasion of Ukraine.

She spoke after the Bank of England took emergency action Wednesday to stabilize U.K. financial markets and head off a crisis in the broader economy after the government spooked investors with a program of unfunded tax cuts, sending the pound tumbling and the cost of government debt soaring.

Truss told BBC local radio that “we had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.”

“Of course lots of measures we have announced won’t happen overnight. We won’t see growth come through overnight,” she said. “What is important is that we are putting this country on a better trajectory for the long term.”

In a series of interviews, Truss said her government’s decision to cap energy bills for households and businesses would help tame inflation and help millions of people facing a cost of living crisis.

But it was not that decision that alarmed the markets. It was the government’s announcement on Friday of an economic stimulus program that included 45 billion pounds ($48 billion) of tax cuts and no spending reductions — without an independent economic assessment of the cost and impact.

The Bank of England warned that crumbling confidence in the economy posed a “material risk to U.K. financial stability,” and said it would buy long-term government bonds over the next two weeks to combat a recent slide in British financial assets.

The bank’s former governor, Mark Carney said that the government and the central bank appeared to be pulling in different directions.

“Unfortunately having a partial budget, in these circumstances — tough global economy, tough financial market position, working at cross-purposes with the Bank — has led to quite dramatic moves in financial markets,” he told the BBC.

The pound traded at around $1.08 on Thursday, above its record low of $1.0373 on Monday. It has lost some 4% of its value since Friday.

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Stimulus Packages Provided During Pandemic Triggered Inflation- CBN

The Central Bank of Nigeria (CBN) has attributed the rising inflationary rates to the stimulus packages provided to citizens during and after the pandemic.

It added that although this increased spending, it also created global supply challenges.

CBN’s director, Monetary Policy Department, Hassan Mahmoud, said this on Wednesday at a post-MPC briefing tagged: “Unveiling Facts behind the Figures’’.

The Monetary Policy Committee had on Tuesday, unanimously voted to increase interest rate to 15.5 per cent.

“A lot of households and small businesses were injected with stimuluses; the U.S did two trillion dollars, Nigeria did about five trillion Naira, these increased the ability of people to spend.

“But the supply side could not meet up with the demand because that volume of injection was far more than the regular intake for those economies, this made prices go up,’’ he said.

Mahmoud also blamed the Russian-Ukraine war, as well as the resurgence of COVID-19 in China for the rise in global inflationary trend.

“That region accounts for more than 50 per cent of global commodity supply and 38 per cent of global oil and gas supply. The war resulted in some shortages which made prices go up.

“Then the COVID-19 lockdown in China. The country is the largest importer of commodities across the globe,’’ he added.

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China’s yuan slides to 14-year low against US dollar

China’s yuan slides to 14-year low against US dollar

China’s yuan fell to a 14-year low against the dollar Wednesday despite US central bank efforts to stem the slide after U.S. interest rate hikes prompted traders to convert money into dollars in search of higher returns.

A weaker yuan helps Chinese exporters by making their goods cheaper abroad, but it encourages capital to flow out of the economy. That raises costs for Chinese borrowers and sets back the ruling Communist Party’s efforts to boost weak economic growth.

The yuan fell to 7.2301 to the dollar, its lowest level since January 2008. One yuan was worth about 13.8 cents, down 15% from its March high.

The yuan has exceeded expectations it might fall to 7 to the dollar after the Federal Reserve started aggressive rate hikes to cool inflation that is at a four-decade high. The Fed has raised rates five times this year and says more increases are likely.

By contrast, the People’s Bank of China has cut interest rates to boost growth that fell to 2.2% over a year earlier in the first six months of 2022 — less than half the official 5.5% target.

The yuan is allowed to fluctuate up or down 2% from its starting price each day in tightly controlled trading. That prevents big daily swings, but down days can add up to a big change over time.

To shore up the exchange rate, Beijing cut the amount of foreign currency deposits Chinese banks are required to hold as reserves to 6% from 8% as of Sept. 15. That increases the amount of dollars and other foreign currency available to buy yuan, which should push up the exchange rate.

Still, that reserve cut is unlikely to stop a slide that is driven by “a strong U.S. dollar and the expectation of more Federal Reserve hikes,” said Iris Pang of ING in a report.

“Less aggressive rate hike talk” might help the yuan rally, but it might weaken further “if the Fed maintains its very hawkish tone” into next year, Pang wrote.

Chinese officials have previously promised to avoid “competitive devaluation” to gain an advantage in trade.

The yuan sank in 2019 during trade tension with then-President Donald Trump. That prompted suggestions Beijing was trying to reduce the impact of U.S. tariff hikes, but there was no official confirmation. The currency later strengthened.

Other governments also are struggling to manage capital flows under pressure from Fed rate hikes. On Friday, Vietnam’s central bank raised a key interest rate in what economists said appeared to be an effort to stop an outflow of money in search of higher returns.

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