The New York Stock Exchange begins delisting securities of three Chinese telecommunications companies after President Trump last month suspended US investments in Chinese companies that Washington said are owned or controlled by the military.
The NYSE’s move, which will restrict access for US investors, follows global index providers MSCI, S&P Dow Jones Indices, and FTSE Russell and Nasdaq, which are removing various Chinese companies from their indices.
This is “a humble move, but at least a national security and human rights awakening,” said Roger Robinson, a former White House official who supports restricting China’s access to US investors.
NYSE said that the issuers, China Telecom Corporation Limited, China Mobile Limited and China Unicom (Hong Kong) Limited, were no longer suitable for listing because the order prohibits any transactions in securities “which are intended to ensure exposure of a US person to such securities of a communist Chinese military company”.
Trump’s November Executive Order affects some of China’s largest corporations.
The decision was intended to crack the teeth of a 1999 law requiring the Ministry of Defense to list Chinese military companies. The Pentagon, which only fulfilled mandate this year, has named 35 companies so far, including oil company CNOOC and China’s top chip maker Semiconductor Manufacturing International.
China has condemned this ban, and fund managers have stated that it might not benefit US investors who are able to borrow the stocks.
The NYSE announced that it would suspend trading in shares on either January 7th or 11th. The issuers have the right to review the decision. Each of the telecommunications companies named by the NYSE are also listed in Hong Kong.
China Telecom is also under fire from the Federal Communications Commission, which said in early December that it had begun withdrawing the company’s approval to operate in the United States.
The companies could not be reached for comment on a holiday in China.
Connections between Washington and Beijing have become increasingly antagonistic last year as the world’s two largest economies battled over Beijing’s handling of the coronavirus outbreak, the introduction of a national security law in Hong Kong and mounting tensions in the South China Sea.
Regardless, President Trump signed a law last month designed to kick Chinese companies off the US stock exchanges if they fail to meet American auditing standards. Market participants said this would add to the rush for US-listed Chinese firms to look for listings in Hong Kong.