The New York Stock Exchange is starting the process of withdrawing shares in three Chinese telecommunications companies, after President Trump last month blocked American investments in Chinese companies that Washington says are owned or controlled by the military.
The NYSE decision, which will limit access for U.S. investors, follows global index providers MSCI, S&P Dow Jones Indices and FTSE Russell and Nasdaq by eliminating several Chinese companies from their indexes.
It is “a modest step, but at least an awakening to national security and human rights-related risks,” said Roger Robinson, a former White House official who supports restricting Chinese access to American investors.
The NYSE said 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 provide investment exposure to such titles, from any Communist Chinese military company, by anyone from the United States. ”
Trump’s executive order in November affects some of China’s largest companies.
The order sought to enforce a 1999 law that required the Department of Defense to compile a list of Chinese military companies. The Pentagon, which fulfilled the mandate just this year, has so far appointed 35 companies, including oil company CNOOC and China’s largest chip maker, Semiconductor Manufacturing International.
China condemned the ban and fund managers said it could benefit non-American investors who could buy shares.
The NYSE said it would suspend stock trading on January 7 or 11. Issuers have the right to review the decision. Each of the NYSE-nominated telecommunications companies also has a listing in Hong Kong.
China Telecom is also under attack by 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 were not found to comment on a holiday in China.
The ties between Washington and Beijing have become increasingly antagonistic over the past year, as the world’s top two economies discussed how Beijing would deal with the coronavirus outbreak, the imposition of a national security law on Hong Kong and rising tensions in the South China Sea.
Separately, President Trump signed a law last month that would expel Chinese companies from U.S. stock exchanges unless they adhere to American audit standards. Market participants said it would intensify the rush by Chinese companies listed in the U.S. to seek new listings in Hong Kong.