Shares in three major Chinese telecom operators fell on Monday after the New York Stock Exchange announced it would remove them from the list to comply with a U.S. government ban.
In Monday morning’s trading in Hong Kong, the shares of the largest, China Mobile Ltd.
CHL 0.88%
, fell 4.5%, putting the stock on its lowest since June 2006. Shares of smaller competitor China Telecom Corp.
TEA -0.04%
lost up to 5.6%, while China Unicom CHU -1.56%
decreased by 3.8%.
The NYSE said on Friday that it would suspend trading in securities issued by the three companies until Jan. 11, while suspending trading in closed-end funds and publicly traded products that hold banned shares.
An executive order signed by President Trump in November will block Americans on January 11 from investing in companies that the U.S. government says help the Chinese military. It is a new setback for American investors in Chinese telecommunications companies. These groups are among the largest global telecommunications providers, but have lagged far behind the broader markets since companies started being listed in the United States more than two decades ago.
The three Chinese companies said that holders of their American depositary receipts can exchange these securities for their Hong Kong-listed common stock through Bank of New York Mellon,
which is the depository for all three ADR programs.
The trio said they regretted US action, but emphasized the limited importance of their deposit receipts. These securities represent 3.3% to 8% of companies’ tradable shares and account for 9% to 22% of total turnover, when considering ADRs and Hong Kong shares, they said in statements separate.
Likewise, the Securities and Exchange Commission of China said on Sunday that the combined market value of ADRs was less than the equivalent of about $ 3.1 billion and that companies would be able to deal with the adverse effects of the ban and delisting.
Still, the financial market regulator attacked the ban, saying it was introduced for “political purposes, completely ignoring the real situation of the companies involved and the legitimate rights and interests of global investors, and seriously disrupting the normal rules and order of business. Marketplace”.
In a note on Sunday, Citigroup analyst Michelle Fang said Hong Kong shares would come under pressure with shareholders liquidating ADRs to convert them into Hong Kong shares. She said that the possible withdrawal of shares from the stock indexes may also cause more sales.
Although the US government has blacklisted the unlisted parent companies of telecom operators, it has not added publicly traded companies to its list. Vendors on the index excluded some companies directly named by US officials, but did not say they would reduce the shares of subsidiaries of blacklisted companies.
Write to Chong Koh Ping at [email protected]
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