S&P Dow Jones Indices said in a statement that it will no longer remove the American Depositary Receipts of three major Chinese telecom companies from its benchmarks, effective Thursday. S&P and Dow Jones had no comment on the possibility that the NYSE would reverse its decision again.
China’s top three Telecom companies — China Mobile, China Telecom and China Unicom — lost more than $30 billion in market value in just the last few weeks of 2020. U.S. President Donald Trump says he’s decided to cut off Chinese investment companies in the United States that have ties to China, most of which are listed in Hong Kong. Shares in China Telecom quickly sold off on Monday January 4th, then jumped the next day. By the end of Wednesday, shares of the big three telecom companies were up at least 0.9%.
According to Reuters and other media reports, the New York Stock Exchange announced that it no longer plans to delist China Mobile, China Telecom and China Unicom (Hong Kong). The NYSE said in a statement on its website that the decision was made after further consultations with regulators. The New York Stock Exchange started the delisting procedure of the three telecom companies on December 31, 2020, while the China Securities Regulatory Commission (CSRC) responded on January 4 that the US implemented the executive order for political purposes, completely disregarded the actual situation of the relevant companies and the legitimate rights and interests of global investors, and seriously damaged the normal market rules and order.
“I have noted that China Unicom and China Telecom have already made preliminary responses to this issue, and yesterday I also briefed you on China’s principled position,” Chinese Foreign Ministry spokeswoman Hua Chunying said in response to a reporter’s inquiry. And I want to emphasize again that America’s status as an international financial center depends on businesses and investors around the world having confidence in the inclusiveness and certainty of its rules-based regime.”
Hua Chunying pointed out that some political forces in the US have recently continued to unjustifiable crackdown on foreign companies listed in the US, which reflects the arbitrary, arbitrary and uncertain nature of its rules and systems. ‘The direct impact of the crackdown on Chinese companies is quite limited, but it will damage the US national interests and its own image, as well as the global standing of the US capital market,’ Hua said. “We hope that the US side will respect the rule of law, respect the market, do more to safeguard the order of the global financial market and protect the legitimate rights and interests of investors, and contribute to the stable development of the global economy.”
China Mobile said in a statement: “At this time, the company will continue to be listed and traded on the New York Stock Exchange. The NYSE regulatory authority will continue to evaluate the applicability of this Executive Order (as described in the Company’s announcements dated November 13, 2020 and January 4, 2021) to the Company and its continuing listing status. The Company will continue to monitor developments closely and will make further announcements as and when necessary in accordance with the Stock Exchange of Hong Kong Limited’s securities listing rules and applicable law.”
Notably, Treasury Department Steven Mnuchin called NYSE Group Inc. (NYSE: NYSE). Mr. Mnuchin expressed his displeasure with NYSE President Stacey Cunningham over the exchange’s surprise decision not to delist three major Chinese telecommunications companies, according to two people familiar with the matter. The reversal of the deal caught some officials at the White House, Treasury and State Department off guard. It has also baffled regulators involved in drafting the order that President Trump signed in November. The order requires American investors to dump Chinese companies deemed to pose a threat to American national security.
Mr. Trump’s executive order still takes effect Jan. 11, and officials overseeing Joe Biden’s transition declined to comment on whether the president-elect would reverse that. If Mr. Biden does not rescind the order, investors such as U.S. investment firms and pension funds will be required to sell their stakes in companies linked to the Chinese military by Nov. 11. American investors will have 60 days to withdraw their money if the United States determines that more companies have ties to the military in the future.