By Alexander Osipovich
The New York Stock Exchange will move forward with delisting three Chinese telecommunications companies targeted by an executive order from President Trump, reversing course yet again after the NYSE said earlier this week that it wouldn't delist them.
The NYSE said Wednesday that trading of the U.S.-listed shares of China Mobile Ltd., China Telecom Corp. and China Unicom (Hong Kong) Ltd. would be suspended at 4 a.m. ET on Monday. Mr. Trump's order seeks to ban trading in securities of companies that the administration says have links to the Chinese military.
The NYSE said its latest action came after it received "new specific guidance" from the Treasury Department's Office of Foreign Assets Control on Tuesday, which listed the three companies' American depositary receipts as being covered by Mr. Trump's order. The NYSE's statement also noted that the companies could appeal the delisting decision to the exchange.
A person familiar with the matter said the NYSE backtracked Monday due to ambiguity in whether the three companies were covered by the order, but the new guidance, which Treasury shared with the exchange late Tuesday, made it clear that the companies must be delisted. The Treasury posted that guidance online Wednesday morning.
Wednesday's reversal is likely to raise further questions about the exchange's handling of the three Chinese stocks. Last week, the NYSE said it would delist the three companies to comply with Mr. Trump's order, only to reverse course on Monday and say that it wasn't delisting them. A person familiar with the matter said the NYSE backtracked due to ambiguity in whether the three companies were covered by the order. The new guidance from the Treasury Department appears to have resolved that issue.
The NYSE's backpedaling drew criticism from the Trump administration and supporters of a hard line against Beijing. Treasury Secretary Steven Mnuchin called NYSE President Stacey Cunningham to object to the NYSE's flip-flop.
All sides have been displeased with how the NYSE, owned by Intercontinental Exchange Inc., has handled Mr. Trump's order, one of the last salvos in his four-year effort to get tough on Beijing.
In China, officials have criticized the delisting of the telecoms companies, saying it would harm the standing of the U.S. in global capital markets. "I'm sure all countries, not just China, are watching what the United States plans to do, which will determine whether it can be seen as a reliable or trustworthy partner for cooperation," a Chinese Foreign Ministry spokeswoman said at briefing Wednesday.
Meanwhile, U.S. critics of Beijing have accused the NYSE of trying to curry favor with Chinese authorities before the inauguration of President-elect Joe Biden, who may take a softer line on trade with China than Mr. Trump.
"The NYSE is trying to judge how the political winds are blowing, and it's a pretty confusing situation right now," said Dan David, founder of Wolfpack Research, an investment-research firm that specializes in shorting, or betting against, companies that it suspects to be engaged in fraud, including Chinese companies.
The NYSE's intent has always been to comply with the executive order, the person familiar with the matter said.
Investors have also been whipsawed as the on-again, off-again delisting announcements have sent the affected Chinese stocks on a wild ride. NYSE-listed shares of China Mobile, China Telecom and China Unicom were all down between 3% and 6% in recent trading Wednesday, in the wake of the newest delisting announcement.
That came after the three stocks sold off Monday, only to rebound Tuesday when it appeared that the NYSE would be allowing the stocks to remain listed after all.
Write to Alexander Osipovich at firstname.lastname@example.org
(END) Dow Jones Newswires