The New York Stock Exchange (NYSE) is about to end trading with the largest Chinese state-owned telecom companies in January. China Mobile (CHL), China Telecom (CHA), and China Unicom (CHU) will all be suspended starting January 11. The move comes following the order of President Donald Trump who last month signed an order banning Americans from investing in companies that the US government describes as controlled or owned by the Chinese military. Mr. Trump has been seen aggressively pushing the regulations against China in his last days in office before the President-Elect Joe Biden will take over.
The Impact On The Growth Of Chinese Companies
The telecom companies in question have all traded on the NYSE for decades. The companies have said that they are considering taking further steps to protect their rights.
All the telecom companies get most of their revenues from China and their revenues in the US are slim to none. The Chinese top regulator has said that delisting the three telecoms from the NYSE will not really have much impact on the growth of the companies. Having said that, the ban from NYSE could affect their shares in other locations. This can be observed looking at the situation in Hong Kong where the shares of all companies slipped by up to 5%.
Trump Targets Chinese Giants Like Huawei Or TikTok
The symbolic move against the Chinese telecom companies is next in the series of actions targeting Chinese companies by Mr. Trump. He has previously banned Chinese giants such as TikTok, Tencent, or Huawei due to the alleged national security threat.
Due to the volatile situation, many of the 200 Chinese companies that are trading on the US stock markets are now choosing dual listings in China and Hong Kong. China has also made its own blacklist with US companies.
China Announces Retaliation
China has also threatened actions against the US after the NYSE ban. The spokesperson of a Chinese Commerce Ministry issued a statement in which they call the delisting something that “will greatly weaken all parties’ confidence in the US capital market”. He added that China will “take the necessary countermeasures to resolutely safeguard the legitimate rights and interests of Chinese companies”. Chinese Commerce Ministry’s statement has, however, not specified what kind of actions are to be expected. The ministry has claimed that the actions of the US were not consistent with the current market rules and can be seen as an abuse of national security.
China Regulator Points Out US Will Be The One Ending Up Hurt
The main regulatory body of China, The China Securities Regulatory Commission (CSRC) has similarly stated that the US move will hurt the US more than the Chinese Telecom companies as it undermines United States’ leading position in the capital market.
According to Fortune, approximately 2% of the total equity of each of the three banned telecom companies lays in U.S-listed shares.