China's airlines could join the multibillion-dollar exit from US markets

The decision by five Chinese state-owned companies to leave the US market adds to skepticism that authorities in both countries can reach an agreement on disclosure rules, with analysts seeing state-controlled airlines as the next potential group to depart, potentially followed by internet giants.  

China and Hong Kong are the only jurisdictions worldwide that don’t allow inspections by the US Public Company Accounting Oversight Board, with Beijing officials citing national security and confidentiality concerns. With a deadline for delistings set for 2024 for those firms that aren’t compliant, US lawmakers are considering passing a bill to bring it forward to next year.

The announcement on Aug. 12 by giants including China Life Insurance Co. and PetroChina Co. to seek delisting from New York “is not a good sign for the auditing spat,” said Gary Ng, a senior economist at Natixis SA in Hong Kong. “It is likely to see more state-owned enterprises and private firms controlling a large amount of data to follow the same steps.” 

China Eastern Airlines and China Southern Airlines could “soon” announce similar intentions, according to Redmond Wong, a Greater China market strategist at Saxo Bank.

Both airlines are controlled by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), the same entity that rules four of the companies that disclosed their US exit plans last week.