NYSE to remove major telecommunications operators from China from the list

The NYSE said at the latest that it would suspend trading in securities issued by China Mobile, China Telecom Corp.

TEA -0.04%

and China Unicom Hong Kong Ltd.

CHU -1.56%

at 4 am on January 11th. It will act four days in advance if it does not obtain confirmation from Depository Trust & Clearing Corp. that the clearing house will settle the negotiations made on 7 and 8 January.

The NYSE said it would also stop trading in closed-end funds and exchange-traded products listed on its NYSE Arca exchange if they hold prohibited shares.

On Friday, China Unicom said it would issue a statement in due course. China Mobile and China Telecom did not immediately respond to requests for comment.

An executive order signed by President Trump in November will prevent Americans from investing in a list of companies that the U.S. government says provides and supports China’s military, intelligence and security services. The ban starts on January 11 and investors have until November to sell off their holdings.

The list currently includes 35 companies – including China’s largest chip maker – as well as surveillance, aerospace, shipbuilding, construction and technology companies.

It was not initially clear whether the request covered subsidiaries, as well as parent companies and U.S. government leaders clashed over how wide the blacklist should be, The Wall Street Journal reported in December.

However, this week, the Treasury Department said it would add subsidiaries to the black list if they were majority owned – or controlled – by a company that was named. The Office of Foreign Treasury Asset Control, which handles economic sanctions, also said the ban covers derivatives and deposit receipts, as well as exchange-traded funds, index funds and mutual funds.

Last month, index compilers, including MSCI Inc.,

The FTSE Russell and S&P Dow Jones Indices said they would remove some Chinese shares from their benchmarks because of the order, although they did not exclude shares issued by subsidiaries and affiliates.

China Mobile, which has a market value of about $ 117 billion, was not included in the original blacklist, although its parent, China Mobile Communications Group, was. Its US shares are barely traded compared to Hong Kong bonds, FactSet data shows. About 2.1 million American Depositary Receipts were traded daily, on average, for the past three months, compared with 34 million Hong Kong shares a day. Each ADR is equivalent to five Hong Kong common shares.

Other US initiatives may also bring more exclusions. Last month, Trump signed legislation that could cause Chinese companies to open U.S. markets if American regulators were unable to inspect their audits in three years. Some Chinese companies, including Alibaba Group Holding Ltd.

and JD.com Inc.,

have already obtained secondary listings in Hong Kong, which could help to mitigate the impact of such action.

Write to Chong Koh Ping at [email protected]