SHANGHAI (Reuters) – China’s top three telcos saw their shares drop by as much as 5% in Hong Kong on Monday, the first trading session since the New York Stock Exchange (NYSE) announced it would withdraw companies according to a plan called “political” China AND of “limited” impact.
The NYSE announced on Thursday that it would withdraw China Mobile Ltd, China Telecom Corp Ltd and China Unicom Hong Kong Ltd following the United States government’s decision in November to block investment in 31 companies that it said belong to or are controlled by the Chinese military.
The China Securities Regulatory Commission, in a question and answer posted on its website on Sunday, said the plan was “politically motivated”.
The measure “completely ignores the real situation of the relevant companies and the legitimate rights and interests of global investors and severely undermines normal market rules,” he said.
American depositary receipts listed by the three telcos have a combined market value of less than 20 billion yuan ($ 3.07 billion), or 2.2% of companies’ net worth, the regulator said.
“Even with the exclusion, the direct impact on the development of companies and on the market operation is quite limited,” he said.
China Mobile’s shares fell 4.5% in Hong Kong on Monday to HK $ 42.20, its lowest price since July 2007. China Telecom fell by 5.6% and China Unicom lost 3.4% against a 0.8% increase in the Hang Seng benchmark.
The three said they had received no notification of exclusion from the NYSE.
In a research note, analysts at Citic Securities said the closing decision lived up to expectations.
“The three companies have an average of only 1.5% of their shares listed in the United States and the rest in Hong Kong, have ample liquidity and have not done any fundraising in the United States for 20 years. Having stocks listed in the United States will only pose more risk to them. ”
Washington has stepped up its tough line against China in recent weeks. In December, he added dozens of Chinese companies to a business blacklist, accusing Beijing of using them to take advantage of civilian technology for military purposes.
On Saturday, China’s trade ministry said it would take “necessary steps” to protect the interests of Chinese companies.
“In recent years, it has been normal to see Chinese companies drop off the United States list or have secondary listings in Hong Kong,” wrote Citic analysts on Monday. “With the delisting, the three telecommunications companies will have the chance to have their shares reevaluated and reduce the cost of financial disclosure.”
($ 1 = 6.5250 yuan)
Reporting by Engen Tham, Wang Jing, Samuel Shen and Pei Li; Christopher Cushing’s Edition