NYSE to delist China Mobile, China Telecom and China Unicom shares
The biggest stock exchange in the US is to delist shares of three Chinese telcos in the latest move in the deepening financial battle between the US and China.
The New York Stock Exchange (NYSE) said it would delist the shares of China Mobile, China Telecom and China Unicom, as a direct consequence of President Donald Trump’s executive order in November 2020 that identified all three as having connections with the Chinese military.
The delisting will take place between Thursday of this week and early next week, said the NYSE, which explained that the companies were “no longer suitable for listing”.
Trump’s order said: “China is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses, which continues to allow the PRC [People’s Republic of China] to directly threaten the United States.”
The USDepartment of Defense kicked off the process earlier in 2020 when it published two lists of companies (here and here, PDFs) that it identified under the National Defense Authorization Act. The lists include the three telcos as well as Huawei, the telecoms equipment maker, as well as construction, aeropace and nuclear companies. They support “the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities,” said the Department of Defense.
The three telcos traded on the NYSE via American depositary receipts (ADRs) which represent only a small fraction of their total value.
The China Securities Regulatory Commission (CSRC) criticised the move yesterday as “politically motivated”, and said it “turns a blind eye to the actual legitimate rights of the firms and their investors and severely damages market rules and order”.
China’s Ministry of Commerce said the NYSE move abused “national security and state power to crack down on Chinese businesses”. It said it would “take the necessary countermeasures to resolutely safeguard the legitimate rights and interests of Chinese companies”, but did not say what those measures might be. The three telcos have not so far commented.
The move comes less than three weeks before the Democratic party’s Joe Biden takes over from Trump as US president, though it is unlikely the new administration will reverse the position on China. In December Democrat members of the US telecoms regulator, the Federal Communications Commission (FCC), backed moves against China Telecom and Huawei. Earlier in the year the US Congress tightened the rules for foreign-owned companies, likely ending hopes that Baidu, Weibo and others could be listed in the US.
The FCC in 2019 refused to grant China Mobile a licence to operate telecoms services in the US, and started action against China Telecom, China Unicom and others to withdraw their existing licences.