NYSE Scraps Plans to Delist Chinese Telecom Stocks -- Update
05 Janeiro 2021 - 3:09AM
Dow Jones News
By Chong Koh Ping and Ben Otto
The New York Stock Exchange reversed its decision to delist
China's three largest telecommunications companies, after
consulting with regulatory authorities about a recent U.S.
investment ban.
In a statement released Monday night Eastern time, the Big Board
said "it no longer intends to move forward with the delisting
action" on China Mobile Ltd., China Telecom Corp. and China Unicom
(Hong Kong) Ltd.
The Hong Kong-listed shares of the three telecom majors surged
on the news. Shares of China Mobile, which is among the most
valuable of China's listed state-owned enterprises, rose as much as
7.5% in late morning trade on Tuesday, while China Telecom and
China Unicom jumped 8.1% and 11%, respectively.
NYSE's earlier plan to delist the companies followed a U.S.
government order, signed by President Trump in November, that
prohibits Americans from investing in a list of companies the U.S.
government says supply and support China's military, intelligence
and security services.
The trading ban was supposed to start on Jan. 11, and investors
would have until November to shed their holdings.
The NYSE had sent out a notification about its plans to commence
delisting procedures around New Year's Day, while markets were
closed. The surprise announcement roiled the Hong Kong-listed
shares and American depositary receipts of the three companies on
Monday after trading resumed, as large and small investors
scrambled to figure out what to do with their ADR holdings.
The current blacklist covers 35 companies, including the
privately held parents of the three listed telecoms companies, as
well as China's largest chip maker, surveillance, aerospace,
shipbuilding, construction and technology companies.
The U.S. Treasury Department's Office of Foreign Assets Control,
which handles economic sanctions, has said the ban covers
derivatives and depositary receipts, as well as exchange-traded
funds, index funds and mutual funds.
Last week, the Treasury said it would add subsidiaries to the
blacklist if they were majority owned--or controlled--by a company
that has been named.
NYSE on Monday said it had further discussions with "relevant
regulatory authorities" about the Treasury Department's recent
statement on its intention to publicly name the subsidiaries of the
banned groups.
"At this time, the Issuers will continue to be listed and traded
on the NYSE," the exchange said, adding its regulation arm will
continue to evaluate how the executive order applies to the three
telecom companies and their continued listing status.
China Mobile has been listed on the Big Board for more than two
decades, while China Unicom and China Telecom have been traded on
the exchange since 2000 and 2002, respectively. All had raised
billions of dollars in their initial public offerings.
Some analysts said the delisting would likely force some
American investors to sell their shares when they were trading near
multiyear lows.
The China Securities Regulatory Commission on Sunday said the
executive order was for political purposes and "entirely ignored
the actual situations of relevant companies and the legitimate
rights of the global investors, and severely damaged market rule
and order."
In separate statements Monday, the three Chinese telcos said
their American depositary receipts represent ownership of 3.3% to
8% of the companies' tradable shares, and account for 9% to 22% of
total trading volumes, when both ADRs and Hong Kong shares are
considered.
On Tuesday, China Unicom and China Telecom noted the NYSE's
updated decision and said they would continue to monitor
developments.
Last month, index compilers including MSCI Inc., FTSE Russell
and S&P Dow Jones Indices said they would remove some Chinese
stocks from their benchmarks because of the order, though they
didn't exclude shares issued by subsidiaries and affiliates.
Write to Chong Koh Ping at chong.kohping@wsj.com and Ben Otto at
ben.otto@wsj.com
(END) Dow Jones Newswires
January 05, 2021 00:54 ET (05:54 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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