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NYSE Will Again Delist Three Chinese Telecom Stocks -- 3rdd Update

01/06/2021 | 03:25pm EDT

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.

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 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.

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.

The Treasury Dept.'s handling of the order has also come under fire. Sen. Marco Rubio (R., Fla.) on Wednesday blamed the department for issuing erroneous guidance that led the NYSE to temporarily walk back its delisting.

"It is outrageous that those in the U.S. Treasury Department attempted to undermine the President's Executive Order in a blatant attempt to serve the interests of Wall Street and the Chinese Communist Party at the expense of the United States," Mr. Rubio said in a statement.

The senator added that he was pleased the NYSE was moving ahead with the delisting. A Treasury spokesman declined to comment.

Critics on all sides hammered the NYSE, owned by Intercontinental Exchange Inc., for its flip-flop on the delistings, even as it remained unclear whether the exchange or the Treasury was at fault for the confusing series of reversals.

In China, officials have criticized the delisting of the telecom 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 a 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.

Derrick Early, an aerospace engineer in Maryland, said he sold China Mobile shares on Monday at a loss when it appeared that they would be delisted. That meant he missed out when the stock jumped more than 9% the next day.

"I'm so cross with President Trump on the ban, and I'm cross with NYSE on whipsawing their delisting policy," he said.

Mr. Trump's order doesn't formally require investors who own shares of the affected Chinese companies to sell them until November. Still, brokerages used by many individual investors have been warning customers that they may have trouble liquidating the shares unless they cash out several days before the ban takes effect early next week.

Last week, for instance, the popular investing app Robinhood told its customers that they had until Monday, Jan. 5, to sell the affected Chinese securities, and afterward "liquidation may not be available."

Write to Alexander Osipovich at alexander.osipovich@dowjones.com

(END) Dow Jones Newswires

01-06-21 1524ET

Stocks mentioned in the article
ChangeLast1st jan.
CHINA MOBILE LIMITED 1.27% 47.75 End-of-day quote.8.03%
CHINA TELECOM CORPORATION LIMITED 0.77% 2.63 End-of-day quote.22.33%
CHINA UNICOM (HONG KONG) LIMITED 0.50% 3.99 End-of-day quote.-10.34%
INTERCONTINENTAL EXCHANGE, INC. 1.71% 118.91 Delayed Quote.3.14%
ROBINHOOD MARKETS, INC. -2.01% 45.94 Delayed Quote.0.00%
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