On December 31, 2020 eastern time, the New York Stock Exchange announced the delisting process of China Mobile, China Telecom and China Unicom. U.S. media analysts say China’s oil majors could face the same fate, with Cnooc the most at risk.
The nyse on December 31, issued a statement, called comply with trump a government ban on American investment “have the military background of Chinese enterprises” executive order, to China Unicom (Hong Kong) co., Ltd. (China Unicom Hong Kong Ltd.), China Mobile co., Ltd. (China Mobile Ltd.) and China Telecom co., Ltd. (China Telecom Corp Ltd) and other three Chinese companies to manipulate the delisting. According to the exchange’s statement, the three companies will suspend trading for the period from January 7 to January 11, 2021, and delisting procedures have been initiated.
Bloomberg intelligence analyst Henik Fung said China’s largest offshore oil producer Cnooc Ltd., or Cnooc, is the most at risk of being devitrified next because it is on a list of companies the Pentagon says are owned or controlled by the Chinese military.
PetroChina Co. and China Petroleum and Chemical Corp., also known as SINOPEC, could be at risk, Ms. Fung said, because the energy sector is crucial to the Chinese military.
“There could be more Delistings of Chinese companies in the U.S., and the oil majors could be the next wave,” said Steven Leung, an executive director at UOB Kay Hian in Hong Kong.
Mr. Leung said the delisting of Chinese carriers would likely have little impact because they do little trading in the U.S. and do not raise much money there.
A Sinopec spokesman declined to comment. Cnooc and petrochina didn’t immediately respond to emailed requests for comment. In Hong Kong, Cnooc fell as much as 5.7 per cent, petrochina as much as 2.5 per cent and Sinopec as much as 1.4 per cent.
On January 3, the China Securities Regulatory Commission spokesman nyse start delisting procedures for China’s three telecom operators said at a regular press briefing, three Chinese companies offering American depository receipts (adrs) listed on the nyse and is close to or more than 20 years, always adhere to the rules of the securities market and regulatory requirements, and are recognised by global investors. The New York Stock Exchange’s direct announcement of the delisting of the three companies was triggered by a US government executive order targeting so-called “Chinese military enterprises”. By implementing the executive order for political purposes, the US has completely ignored the actual situation of relevant companies and the legitimate rights and interests of global investors, seriously undermining normal market rules and order.
The CSRC spokesman pointed out that the three companies have a large user base, stable fundamentals, and have important influence in the global telecommunications service industry. Its overall size is small, with a combined market capitalisation of less than Rmb20bn, or the largest 2.2 per cent of the three companies’ total equity, with Only about Rmb800m for China Telecom and about Rmb1.2bn for China Unicom. Lack of liquidity, small trading volume, lack of financing function, even delisting, the direct impact on the company’s development and market operation is quite limited. We firmly support the three companies in safeguarding their rights and interests in accordance with the law and believe that they can properly deal with the adverse impact of the executive order and delisting measures.
A spokesman for the SECURITIES and Futures Commission said the US’s status as an international financial centre depended on global companies and investors’ trust in the inclusiveness and certainty of its rules and institutions. Recently, some political forces in the United States, at the risk of damaging the global status of the American capital market, continue to unreasonably suppress foreign companies listed in the United States, reflecting the arbitrariness, capriciousness and uncertainty of the rules and regulations. This is unwise behavior. “We hope the US side will respect the market and the rule of law, and do more to safeguard the global financial market order, protect the legitimate rights and interests of investors and contribute to the stable development of the global economy,” the CSRC spokesman said.
On January 2, according to China’s Ministry of Commerce web site message, a commerce ministry spokesman 2 is the New York stock exchange to three Chinese companies from nyse delisting speaking, said this kind of abuse of national security, the use of state power on the practice of Chinese enterprises do not conform to the market rules, against market logic, not only damage the legitimate rights and interests of Chinese enterprises, also harm the interests of investors from all over the world, including America, would seriously weaken confidence in the U.S. capital markets.
The Spokesperson of the Ministry of Commerce stressed that China opposes the US move to misuse national security to include Chinese enterprises in the so-called “Communist Party of China Military Companies” list and will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises. “At the same time, we hope that the United States and China will work together to create a fair, stable and predictable business environment for businesses and investors of the two countries and bring bilateral economic and trade relations back to the right track at an early date,” the ministry spokesman said.
US President Donald Trump signed an order in November banning US investments in companies owned or controlled by the Chinese military, in an attempt to pressure Beijing over what he sees as abusive business practices. The order prohibits U.S. investors from buying or selling shares of Chinese companies designated by the Pentagon to have military ties. The executive order has prompted a number of index companies, including MSCI, S&P Dow Jones Global Indices and FTSE Russell, to drop Chinese companies.
China’s foreign ministry later accused the US of “malicious defamation” of its policy of civil-military integration and vowed to protect Chinese companies. Chinese officials have also threatened to respond to the Trump administration’s previous actions with their own blacklist of American companies. The Chinese Foreign Ministry said the U.S. government was politically motivated to smear China’s policy of integrated military-civilian development, abuse state power, unjustifiably suppress Chinese companies, and seriously violate the principles of market competition and international economic and trade rules.
In early December 2020, FTSE Russell announced the removal of eight Chinese companies from its global index, including Hikvision, CRRC, and ChemChina. The FTSE Russell will also remove SMIC from its index in January 2021.