Sunday, May 9, 2021

NYSE begins to withdraw China’s three largest state-owned telecommunications groups

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The New York Stock Exchange has begun delisting China’s three largest telecommunications groups to comply with a Trump administration executive order banning U.S. investors from holding stakes in companies suspected of having ties to the Chinese army.

The move by the largest stock exchange in the United States follows similar restrictions from index providers and will restrict Chinese companies’ access to capital from U.S. investors.

China Mobile, China Telecom, and China Unicom all maintain listings in Hong Kong, which will limit damage from the NYSE withdrawal. China Mobile, the country’s largest state-backed mobile network operator, generated $ 107 billion in revenue last year. China Telecom had sales of $ 54 billion and China Unicom brought in $ 42 billion.

The NYSE said companies have the right to reconsider the decision, with write-offs scheduled to begin as early as January 7.

China Mobile, China Telecom and China Unicom did not immediately respond to a request for comment.

The exchange said the decision was made to comply with a executive order signed by Donald Trump, US President, in November. The order banned further trading in shares of Chinese companies that the Pentagon claims to have ties to the Chinese military from Jan.11, 2021, and gave existing shareholders until November to sell their stakes.

Last year, the Pentagon released three slices of Chinese companies with suspected military ties, which included several of the country’s largest and most powerful state-owned enterprises. The Defense Department listed two of the telecommunications groups in June, as well as Huawei and Hikvision, the maker of surveillance cameras.

The U.S. Congress also passed a defense spending bill last month that would require the Pentagon to publish a comprehensive directory each year of companies with suspected military ties to China, underscoring the growing bipartisan consensus on the adoption of ‘a firmer stance on China.

The actions of the Trump administration have also forced many major index providers, including MSCI, FTSE Russell, Nasdaq and S&P Global Dow Jones Indices to abandon several Chinese companies that have been listed by the Pentagon.

Pressure from the Trump administration on Chinese companies listed in the United States has helped spark a wave of secondary listings in Hong Kong from China’s biggest tech companies, including e-commerce groups Alibaba and JD.com. Baidu, the Chinese internet company, also said it was considering an initial public offering in the city.

Beijing did not immediately respond to the news on New Years Day, a public holiday in China. He condemned the ban and threatened to blacklist American companies.

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