Since Chinese companies listed on the U.S. stock exchange face increasing pressure of being delisted, some are now considering listing on the SIX Swiss Exchange through Global Depository Receipts (GDR), bank certificates listing shares in two or more countries.
Two Chinese manufacturing giants, Sany Heavy Industry and Lepu Medical Technology, have recently announced plans to list on the Swiss Exchange.
“The decision would broaden international financing channels and advance our company’s international business development,” the two companies stated.
Following their statements, Chinese battery manufacturer, Gotion High-tech, also announced plans on March 17 to use the SIX Swiss Exchange through GDR.
None of the three companies disclosed financial information details or listing dates, saying details were still pending approval by their boards of directors and regulatory authorities before actual implementation.
In response to their announcements, Jürg Schneider, SIX Swiss Exchange spokesperson, told the AWP Financial News that “everything is ready” on their side, as the GDR listing segment has existed since 2007, it has just never been used.
Failure to Meet Audit Requirements In US
On March 10, the U.S. Securities and Exchange Commission (SEC) warned it would delist five Chinese companies for failing to meet audit requirements under the Foreign Accountability Act. The five companies would be the first batch to be held accountable under the Act since its adoption in 2020.Additionally, because the Chinese Securities Act prohibits Chinese-based companies from turning over audit documents to the United States, all Chinese companies listed on the U.S. stock market may be subject to delisting.
Chinese stocks listed in the U.S. plunged following the SEC’s warning.
Furthermore, the Russia-Ukraine war worsened investors’ expectations as China refused to condemn Russia’s attacks, prompting concerns about potential sanctions on China by the United States.
Similarly, the Hong Kong stock market and the China A-Share market have also suffered significant losses recently as the Hang Seng Index dropped to a six-year low on March 15.
Faced with these financial uncertainties, the Chinese regime’s Financial Stability and Development Committee held a meeting on March 16, presided over by Vice Premier Liu He.
Six days prior to the meeting, the China Securities Regulatory Commission (CSRC) released provisions on depository receipts, which emphasized the need for expanding to stock exchanges outside the country and allowing companies to list on the Swiss and German stock markets.
The plans announced by the three Chinese companies, Sani, Lepu, and Gotion, to list in Switzerland, appear to correlate to the new policies discussed during this meeting. All three companies have called their decisions a “response to the domestic capital market policies of deepening financial connections with European markets.”
The European Union became China’s largest trading partner in the first two months of 2022, surpassing the Association of Southeast Asian Nations (ASEAN) by $570 million, at $828.1 billion dollars in bilateral trade.
