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New York Stock Exchange delisting 3 Chinese firms under Trump order

January 02, 2021 | 08:32

Three Chinese companies will be booted off the New York Stock Exchange this month under an executive order signed in November by President Donald Trump.

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The New York Stock Exchange will delist three Chinese companies to comply with a US executive order. Photo: AP

Three Chinese companies will be booted off the New York Stock Exchange this month under an executive order signed in November by President Donald Trump.

The exchange says China Telecom Corp. Limited, China Mobile Limited, and China Unicom Hong Kong Limited will be delisted from the exchange. Trump issued an order on November 12 barring investment in publicly traded companies that the U.S. government says are owned or controlled by the Chinese military.

The statement issued late December 31 says the exchange will suspend trading of the companies as early as January 7 or as late as January 11. It says the stock issuers can appeal to a committee of the NYSE’s board, according to the Associated Press (AP).

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U.S. President Donald Trump gestures while speakings during a news conference at the White House on Sept. 27, 2020, in Washington. Photo: AP Photo

Quantitative hedge fund managers including Renaissance Technologies LLC, Dimensional Fund Advisors LP and Two Sigma Investments LP were among the largest holders in these U.S. listings but the stakes they held at the end of September were small, 13F filings show.

The three Chinese companies have separate listings in Hong Kong. All generate the entirety of their revenue in China and have no meaningful presence in the U.S. except for their listings there. 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 amid heightened geopolitical friction between the U.S. and China, Bloomberg said.

China Mobile, China Telecom and China Unicom Hong Kong did not immediately respond to requests for comment by the South China Morning Post on January 1.

China vows to protect the firms

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Chinese mobile phone operator, China Mobile, is among the companies whose shares are being delisted from the New York Stock Exchange. Photo: Bloomberg

According to Bloomberg, the Chinese Foreign Ministry later 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.

The executive order has resulted in a series of companies being removed from indexes compiled by MSCI Inc., S&P Dow Jones Global Indices and FTSE Russell.

The U.S. Federal Communications Commission in May barred China Mobile from operating in the U.S. In December, it ordered carriers to remove equipment made by Huawei Technologies Co., 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.

FCC Moves Against China Telecom and Huawei, Citing Security

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Global exchanges, including NYSE and Nasdaq Inc., courted Chinese companies during the past decade as they attempted to expand their IPO business, particularly in the internet sector. Photo: Reuters

Global exchanges, including NYSE and Nasdaq Inc., courted Chinese companies during the past decade as they attempted to expand their IPO business, particularly in the internet sector. In response, Hong Kong Exchanges & Clearing Ltd. changed its rules in recent years to lure back listings, including allowing share sales by companies with weighted voting rights -- strengthening the power of company founders at the expense of weaker protections for minority investors.

Companies including e-commerce giants Alibaba Group Holding Ltd. and JD.Com Inc., which already had listings in New York, conducted secondary listings in Hong Kong in the past two years as tensions between the U.S. and China intensified on a range of issues including trade and the novel coronavirus.

Political analysts expect little change in policy under President-elect Joe Biden due to widespread frustration with China’s trade and human rights records and accusations of spying and technology theft, AP said.

U.S. officials have complained that China’s ruling Communist Party takes advantage of access to American technology and investment to expand its military, already one of the world’s biggest and most heavily armed./.

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