The New York Stock Exchange said late on Thursday it would delist three Chinese telecom giants to comply with a US executive order that restricted the public listing of companies identified as "affiliated with the Chinese military". China Mobile, China Telecom, China Unicom Hong Kong will be suspended from trading between January 7 and January 11, according to the statement by the NYSE.
Trump signed an order last November barring U.S. investments in Chinese companies that it claims to be owned or controlled by the Chinese military. The injunction is slated to deter U.S. investors from buying shares of the Chinese companies designated by the Pentagon as backed by the military forces.
Prior to the delisting, in May the U.S. Federal Communications Commission barred China Mobile from operating in the U.S. In December, it ordered carriers to remove equipment made by Huawei and begun looking into whether China Telecom should be allowed to operate in the country. China Telecom’s U.S. unit told the FCC in a June 8 filing that it’s an independent business based in the U.S. and not subject to Chinese government control.
Bloomberg reports that quant hedge fund managers including Renaissance, Dimensional and Two Sigma are among the largest holders in these U.S. listings but the stakes they held at the end of September were small, 13F filings show.
After the NYSE delisting, the three Chinese telecom giants will continue to trade in Hong Kong where they are also listed. All three companies generate most of their revenue in China and have no meaningful presence in the US. Their shares are also thinly traded on the New York Stock Exchange compared to their primary listings in Hong Kong, making this NYSE delisting more of a symbolic blow according to Bloomberg amid the heightened geopolitical friction between the U.S. and China.
The U.S. Department of Commerce on December 21 added 103 entities including 58 Chinese companies onto a "military end user" list, aiming to restrict them from buying a wide range of U.S. goods and technology. It came just a weekend after the U.S. added dozens of Chinese firms, including chipmaker Semiconductor Manufacturing International Corp and drone producer SZ DJI Technology, to its "entity list". A pack of Chinese companies has been removed from indexes compiled by MSCI, S&P Dow Jones Global Indices and FTSE Russell out of the order.
The "entity list," which dates back to February 1997, covers a host of businesses, research institutions, and individuals subject to license requirements for the export, re-export and transfer of certain items to the country.
China urged the U.S. side to stop taking "erroneous actions" on Chinese companies in response to the U.S. latest restrictions on Chinese firms. "We firmly oppose the U.S. politicizing economic and trade issues," said Chinese Foreign Ministry spokesperson Wang Wenbin on December 22, adding the move violates international trade rules.
"The U.S. not only harms the legitimate rights and interests of Chinese companies, but also injures the interests of U.S. companies," added Wang.
The Chinese Foreign Ministry also accused the U.S. of “viciously slandering” its military-civilian integration policies and vowed to protect the country’s companies. Chinese officials have also threatened to respond to previous Trump administration actions with their own blacklist of U.S. companies, but have so far failed to do so.