NYSE says it will no longer delist three Chinese telcos

The New York Stock Exchange (NYSE) on Monday said it no longer intends to move forward with the delisting action against China Mobile, China Unicom (Hong Kong) and China Telecom, which was announced on December 31, 2020.

A sign for Wall Street hangs outside near the New York Stock Exchange before the closing Bell at the NYSE on Wall Street in New York City on Monday, January 4, 2021. [Photo: UPI via Newscom via VCG/John Angelillo]

The exchange, in a statement published late Monday on its website, said it made the decision "in light of further consultation with relevant regulatory authorities in connection with the Office of Foreign Assets Control."

China Unicom (Hong Kong) and China Telecom said they have noted "that the NYSE has updated its earlier decision" and they "will continue to be listed and traded on the NYSE," according to announcements to the Hong Kong Exchanges and Clearing (HKEX) on Tuesday.

China Mobile had no announcement as of press time.

After news of the reversal, all three Chinese telecom giants saw their Hong Kong-listed shares rally, and their H shares rose over 5 percent before the lunch break on Tuesday.

The announcement came four days after the NYSE said it would suspend trading in shares of the three Chinese telecom companies between January 7 and January 11 and proceedings to delist them had started.

The exchange had originally planned to comply with an executive order issued in November by the Trump administration that imposes restrictions on companies identified as "affiliated with the Chinese military."

The three telecom giants said in their respective announcements to the HKEX on Monday that they had not received notification from the NYSE on its decision to delist their American Depositary Shares (ADSs).

China Mobile's ordinary shares held in the form of ADSs amounted to approximately 2 percent of the company's total issued share capital as of December 31; for China Telecom it's about 0.57 percent, and for China Unicom it's roughly 1 percent.

The overall scale of the three companies' ADSs is small with a total market value of less than 20 billion yuan (about $3 billion), of which China Unicom has 1.2 billion yuan and China Telecom has 800 million yuan, according to the China Securities Regulatory Commission (CSRC).

The CSRC said Sunday that the delisting impact on the three telecom companies would be quite limited given their small amount of U.S.-traded shares, and that they can properly deal with the adverse effects of delisting measures.

"It's another gesture by the U.S. to decouple technology and finance with China," Wang Dan, chief economist at Hang Seng Bank (China) told CGTN. "Losing their listing is unlikely to affect those firms, as their revenues are mostly from China."

"Chinese companies, especially state-owned, will increasingly rely on the Hong Kong market for overseas financing," Wang told CGTN.

Wang predicted that, "President-elect Joe Biden may not necessarily follow Trump's executive order once he takes over the office in January 20. The new administration will reevaluate the bilateral relationship and is likely to adopt a milder stance towards China."