Chinese telecom stocks come as US delisting looms

Shares in China’s three major telecommunications carriers fell on Monday, with the New York Stock Exchange saying it would distribute them to comply with a US government ban.

Hong Kong shares in Monday-morning trading, largest, China Mobile Limited

CHL 0.88%

Falling to 4.5%, putting the stock at its lowest close since June 2006 Corp.

Cha -0.04%

China Unicom CHU, lost as over 5.6% -1.56%

3.8% retreated.

The NYSE said on Friday that it would suspend trading in securities issued by the three companies until January 11, while halting trading in closed-ended funds and exchange-traded products that hold restricted stocks.

An executive order signed by President Trump in November will block on 11 January. The US government said that the US government would help the Chinese military. This is a fresh setback for US investors in Chinese telecommunications companies. These groups are among the largest global telecommunications providers, but largely lagged behind broader markets since companies began listing in the US two decades ago.

Three Chinese companies said that holders of their US depository receipts could swap those securities through Bank of New York Mellon for their Hong Kong-listed ordinary shares.,

Which is the depository for all three ADR programs.

The trio said they regret the US move but stressed the limited importance of their deposit receipts. These securities represent the ownership of 3.3% to 8% of the tradable shares of the companies, and accounted for 9% to 22% of the total trading volume, when both ADR and Hong Kong shares are considered, they separated – Said in different statements.

Similarly, the China Securities Regulatory Commission on Sunday stated that the combined market value of the ADR was equivalent to approximately $ 3.1 billion and that companies would be able to face the adverse effects and delisting of the ban.

Nevertheless, the financial-market regulator attacked the ban, stating that it “was introduced for political purposes, completely ignoring the actual status of the companies concerned and the legitimate rights and interests of global investors, and in general The general market is disrupting rules and order. “

In a note on Sunday, Citigroup analyst Michelle Fang said Hong Kong shares would come under pressure as shareholders converted ADR to Hong Kong stock. He said that possible expulsion of shares from the stock index could lead to further sell-offs.

While the US government has blacklisted unlisted parent companies of telecommunications companies, it has not included publicly traded ones in its list. Index providers have been moved by US authorities to exclude certain companies directly named, but have not stated that they will relinquish stock in listed subsidiaries of black-listed firms.

Write Chong Koh Ping at [email protected]

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