The New York Stock Exchange (NYSE) abandoned plans to delist three state-owned Chinese telecoms on Monday, reversing a decision that further dented already strained relations between the world’s two superpowers.
In a brief statement, the stock exchange said it “no longer intends to move forward with the delisting action” for China Telecom Corp (中國電信), China Mobile Ltd (中國移動) and China Unicom Hong Kong Ltd (中國聯通).
No detailed reason was given for the sudden reversal, but the exchange said it came after “further consultation with relevant regulatory authorities.”
Photo: Bloomberg
Shares in the three state-owned telecoms jumped on the news. In Hong Kong trading yesterday afternoon, China Unicom was up nearly 9 percent, while China Mobile and China Telecom each rose more than 6 percent.
Mainland Chinese shares reversed earlier losses, while the yuan rose about 0.7 percent against the US dollar.
Hong Kong-based Amber Hill Capital Ltd (安山資本) asset management director Jackson Wong (黃志陽) said the move was “quite unexpected.”
“Some funds that had an obligation to unload these shares will now need to buy them back. Some investors are also starting to pricing in a scenario that the decision to halt delistings could be a start of a de-escalation in tensions between China and the US,” he said.
The reversal comes just four days after the NYSE said it was ending trading in the companies to comply with an order by US President Donald Trump’s administration barring investment in firms with ties to the Chinese military.
Trump signed an executive order in November banning Americans from investing in Chinese companies deemed to be supplying or supporting the country’s military and security apparatus, earning a sharp rebuke from Beijing.
The order listed 31 companies it said China was using for the “increasing exploitation” of US investment capital to fund military and intelligence services, including the development and deployment of weapons of mass destruction.
China had criticized the moves to delist its companies and threatened countermeasures.
Calls and e-mails to the media department of the China Securities Regulatory Commission were not immediately returned yesterday.
The commission had responded to the NYSE’s initial plan by calling it groundless and “not a wise move.”
Spokespeople for the US Department of the Treasury, US Securities and Exchange Commission and the Financial Industry Regulatory Authority did not immediately reply to requests for comment.
In separate statements, China Telecom and China Unicom said they would continue to monitor the developments, while China Mobile did not respond to requests for comment.
“The Trump administration is leaving,” said Orville Schell, director of the Asia Society’s Center on US-China Relations. “That puts a big question mark over anything that is ordered during Trump’s period of presidency.”
The NYSE faced criticism from some market watchers for the way it handled the situation.
Travis Lundy, an Asia markets veteran and independent analyst who publishes on the Smartkarma platform, wrote on Twitter that the U-turn reflected “rank ineptitude” by the exchange and “weak leadership” by the treasury department.
“This is the most bizarre series of events we have witnessed in the US during this analyst’s career,” said Edison Lee (李裕生), the head of telecom research at Jefferies LLC in Hong Kong.
Additional reporting by Bloomberg
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