The New York Stock Exchange (NYSE) announced just before the end of 2020 that it had begun proceedings to delist China Telecom, China Mobile and China Unicom’s shares from the stock market.
The move follows an executive order signed by President Donald Trump on November 12, prohibiting any U.S. companies or people from investing in companies with ties to the Chinese military.
The NYSE confirmed that trading for these securities will stop on January 11. The U.S. Department of Defense had previously stated that the three Chinese operators had significant connections to Chinese military and security forces.
In a statement issued on January 3, the China Securities Regulatory Commission (CSRC) said that the decision by the NYSE will not have an impact in these three companies’ businesses, as the size of companies’ American Deposit Receipt (ADR) listings remains less than 2.2% of their total equity, with a market capitalization of less than CNY20 billion ($3.09 billion).
“The liquidity, trading volume and fund-raising functions of the ADRs have been relatively low, therefore the direct impact of a potential delisting would be rather limited,” CSRC said.
CSRC added that the announcement of the NYSE to delist the three telecom companies stems from the executive order of the U.S. administration targeting companies it alleges are connected to the Chinese military. “The executive order, which is based on political purposes, have entirely ignored the actual situations of relevant companies and the legitimate rights of the global investors, and severely damaged market rule and order,” the regulator said.
“We firmly support the three companies to safeguard their legitimate rights according to law, and believe they are able to properly handle any negative impact caused by the executive order and potential delisting,” the regulator added.
China Unicom and China Mobile said they are currently reviewing ways to protect the companies’ rights, while China Telecom said it’s considering “corresponding options” to “safeguard the legitimate interests of the company.”
Also, the China’s Ministry of Commerce said on January 2 that the country will adopt all the necessary actions to protect the rights of Chinese firms and said it expects the two countries can work together to create a fair, predicable environment for businesses and investors.