The New York Stock Exchange (NYSE) has reversed its initial plan to delist three major Chinese telecommunications companies after a U.S. presidential directive targeted firms alleged to have ties to the Chinese military.
Last week, the NYSE began delisting procedures for China Mobile, China Unicom, and China Telecom following an executive order signed in November. The order sought to restrict transactions in securities that would provide U.S. investors exposure to any company designated as a “Communist Chinese military company.”
Beijing criticized the directive, and the affected companies have repeatedly denied any military affiliations. A spokesperson for China’s Ministry of Commerce said the government opposes what it described as the U.S. misuse of national security claims to place Chinese firms on such lists and vowed to take measures to protect their legitimate rights and interests.
Initially, the NYSE said the three telecoms were “no longer suitable for listing,” and indicated removals could begin as early as January 7. However, the exchange announced on Monday evening that, after further consultation with relevant regulatory authorities, it no longer intended to proceed with the delistings.
The U.S. listings represent only a small portion of these companies’ overall shares. In 2020, China Telecom’s U.S.-traded shares accounted for no more than 12 percent of its Hong Kong trading volume, while China Mobile’s U.S. listing represented about 6.9 percent.
Share prices for all three companies fell sharply after the initial delisting announcement but began recovering once the NYSE signaled it would not move forward. China Unicom rallied nearly 11 percent to reach a six-week high on Tuesday, China Telecom rose more than 8 percent, and China Mobile gained around 7.5 percent.
Currency markets also reacted: the Chinese yuan strengthened on hopes that U.S.-China tensions might ease as President-elect Joe Biden prepared to take office.
Some analysts cautioned that markets may be too optimistic about an immediate thaw, noting the incoming administration may be reluctant to concede quickly on high-profile issues involving China during its first 100 days.
Update: The NYSE subsequently reversed this reversal and announced it will proceed with delisting the telecom groups.
China Telecom Corporation Limited (NYSE: CHA), China Mobile Limited (NYSE: CHL), and China Unicom (Hong Kong) Limited (NYSE: CHU) after 9:30 a.m. eastern time on January 11, 2021.” https://t.co/634Uk29vDH
— *Walter Bloomberg (@DeItaone) January 6, 2021
(Photo by lo lo on Unsplash)
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