Shares of China’s three largest telecoms operators fell on Monday after the New York Stock Exchange said it would withdraw them to comply with a US government ban.
In Monday morning transactions in Hong Kong, the shares of the largest, China Mobile Ltd.
CHL 0.88%
, fell as much as 4.5%, putting the stock on track for the lowest close since June 2006. Shares of a smaller competitor China Telecom Body.
NOT -0.04%
lost up to 5.6%, while China Unicom CHU -1.56%
to withdraw 3.8%.
The NYSE said on Friday that it will suspend trading in securities issued by the three companies until January 11, while it will stop trading in closed-end funds and exchange-traded products that hold prohibited shares.
An executive order signed by President Trump in November will block Americans from investing in companies on January 11, according to the US government, helping the Chinese military. It is a new failure for American investors in Chinese telecommunications companies. These groups rank among the world’s largest telecommunications providers, but have lagged far behind larger markets since companies began listing in the United States more than two decades ago.
The three Chinese companies said that holders of US deposit receipts can exchange those securities with their ordinary shares listed on Hong Kong through Bank of New York Mellon,
which is the repository for all three ADR programs.
The trio said they regret the US move, but stressed the limited importance of their storage receipts. These securities represent 3.3% to 8% of the tradable shares of the companies and represent 9% to 22% of the total trading volume, when both ADR shares and Hong Kong shares are taken into account, they stated in separate statements.
Similarly, China Securities Regulatory Commission said on Sunday that the combined market value of ADRs was less than the equivalent of about $ 3.1 billion and that companies will be able to cope with the adverse effects of the ban and deregistration. .
However, the financial market regulator challenged the ban, saying it was introduced for “political purposes, completely ignoring the real situation of the companies concerned and the legitimate rights and interests of global investors and severely disrupting normal market rules and order”.
In a note on Sunday, Citigroup analyst Michelle Fang said shares in Hong Kong will be under pressure as shareholders liquidate ADRs to convert them into shares in Hong Kong. She said the potential removal of shares from stock indices could also lead to further sales.
While the US government blacklisted unlisted parent companies of telecommunications operators, it did not add publicly traded companies to its list. Indicator providers have moved to exclude some companies named directly by US authorities, but have not said they will drop stocks from blacklisted subsidiaries.
Write to Chong Koh Ping at [email protected]
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