The New York Stock Exchange begins the process of delisting the securities of three Chinese telecommunications companies, after President Trump last month banned US investments in Chinese companies Washington says they are owned or controlled by the military.
The NYSE move, which will limit US investor access, follows global index providers MSCI, S&P Dow Jones Indices and FTSE Russell and Nasdaq by deleting various Chinese companies from their indexes.
It is “a modest step, but at least a wake-up call to national security and human rights risks,” said Roger Robinson, a former White House official who supports limiting Chinese access to US investors.
The NYSE said that the issuers, China Telecom Corporation Limited, China Mobile Limited and China Unicom (Hong Kong) Limited, were no longer suitable for listing, as the order prohibits any securities transactions “intended to ensure investment exposure to such securities,” of any communist Chinese military company, by anyone in the United States.
Trump’s November executive order affects some of China’s largest companies.
The order was intended to give rise to a 1999 law requiring the Department of Defense to compile a list of Chinese military companies. The Pentagon, which has served only this year, has so far appointed 35 companies, including CNOOC oil company and China’s largest chip maker, Semiconductor Manufacturing International.
China has condemned the ban, and fund managers say it could benefit non-US investors who are able to take stock.
The NYSE has said it will suspend trading in the shares on either January 7 or January 11. Issuers have the right to a review of the decision. Each of the telecommunications companies named by the NYSE also has a list in Hong Kong.
China Telecom is also under fire from the Federal Communications Commission, which said in early December that it had begun the process of revoking the company’s authorization to operate in the United States.
The companies could not be reached for comment on a public holiday in China.
Washington-Beijing ties have become increasingly antagonistic in the past year, as the world’s top two economies have faced Beijing’s management of the coronavirus outbreak, the imposition of a national security law in Hong Kong and the rise of tensions in the South China Sea.
Separately, President Trump signed a law last month that would expel Chinese companies from US stock markets, unless they comply with US auditing standards. Market participants said that this will intensify the rush of Chinese companies listed in the US to look for a list in Hong Kong.