China delistings rise to near record highs in 2023 as market sell-off spawns a horde of below par stocks
- A total of 45 companies were removed from mainland China exchanges in the year-to-date compared with an all-time high of 46 struck last year
- China is enforcing delistings strictly to restore investor confidence after its stock market ranked among the worst performers globally this year
The number of companies delisted from China’s stock markets are approaching a record high this year, with about half of them losing their listing status after languishing below par value.
A total of 45 companies were removed from the Shanghai and Shenzhen exchanges in the year-to-date period, according to Dongguan Securities. The number of delistings struck an all-time high of 46 last year, it said. Among those, at least 20 companies were delisted for trading below the one-yuan par value for 20 days, one of the conditions which could trigger a delisting.
In recent years, China has been stricter with the delisting rules to restore investor confidence as the nation’s stock market ranked among the worst performers globally this year.
Before the recent uptick, less than 10 companies were delisted each year between 2008 and 2018, with only one each in 2014 and 2016, reflecting authorities’ leniency with respect to delistings to protect state-controlled listed companies.
Still, the numbers are benign. With the 45 companies booted from the exchanges this year, China has a delisting ratio of 0.85 per cent this year, compared with 2.04 per cent in Hong Kong and almost 11 per cent in the US, according to Dongguan Securities.
