China oil majors may face US delisting after telcos cut

[NEW YORK] Chinese oil majors may be next in line for delisting in the U.S. after the New York Stock Exchange said last week it would remove the Asian nation's three biggest telecom companies.

China's largest offshore oil producer Cnooc Ltd could be most at risk as it's on the Pentagon's list of companies it says are owned or controlled by Chinese military, according to Bloomberg Intelligence analyst Henik Fung. PetroChina Co and China Petroleum and Chemical Corp, also known as Sinopec, may also be under threat as the energy sector is crucial to China's military, he said.

"More Chinese companies could get delisted in the US and the oil majors could come as the next wave," said Steven Leung, executive director at UOB Kay Hian in Hong Kong. At the same time, the impact of removing the telecom firms is probably minimal as they were thinly-traded in the US and they haven't raised much funds there, he said.

A Sinopec spokesperson declined to comment. Cnooc and PetroChina didn't immediately comment. In Hong Kong, Cnooc fell as much as 5.7 per cent Monday while PetroChina dropped as much as 2.9 per cent. Sinopec rose 0.6 per cent.

The three firms are mostly traded in Hong Kong, although they each have what are known as American Depository Receipts listed in New York. Trading volumes are much higher in Hong Kong, according to exchange data.

"The bottom line is the impact will be very limited," said Neil Beveridge, an analyst with Sanford Bernstein & Co in Hong Kong. "Most institutional investors invest through the Hong Kong shares rather than the US ADRs. The biggest downside for investors would be the loss of transparency from SEC filings."

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