LOSS-MAKING shipping company Nanjing Tanker Corp. will be delisted from the Shanghai Stock Exchange after a five-day grace period, marking the first time for a company backed by the Central Government to be dropped from a domestic exchange.

    The delisting comes after the government allowed China’s first-ever public bond default in March and underscores the difficulties facing domestic companies saddled with record debt in a slowing economy.

    The delisting had been widely anticipated after the company said in January it was poised to post its fourth straight year of loss, breaching exchange rules.

    The Shanghai exchange, by far the bigger of China’s two stock exchanges, said in a statement Friday that it has decided to end Nanjing Tanker’s listing status after its fourth straight year of losses. The company will have a 30-day period of trading before delisting takes effect.

    The company has the option of appealing the decision in the next five days. Trading in Nanjing Tanker shares has been suspended since April 2013.

    Nanjing Tanker, the oil and bulk chemicals marine freight subsidiary of State-owned Sinotrans & CSC Holdings Co., reported 12.45 billion yuan (US$2.05 billion) in total debt at the end of September, with debt outpacing equity by more than four times, exchange filings showed.

    “It could be a good example for China’s market-oriented reforms as it showed the government’s determination to strictly enforce the delisting mechanism to take off poor performers from the market,” said Huang Cendong, an analyst with Sinolink Securities.

    China’s securities regulator issued delisting rules in 2001, but analysts say the process has been ambiguous and underdeveloped. A lack of strong punitive measures, they say, has contributed to the poor average quality of listed companies and encouraged irregularities such as the dumping of bad assets through backdoor stock market listings.

    According to calculations based on exchange data, around 90 firms, or just 3 percent of the 2,600 firms, have been delisted from the Shanghai and Shenzhen exchanges since their establishment more than 20 years ago.

    However, the Nanjing Tanker delisting is the first by a company backed by the Central Government. (SD-Agencies)