The New York Stock Exchange (NYSE) is beginning the process of delisting the shares of three Chinese telecommunications companies, after President Donald Trump last month forbade US investment in Chinese firms Washington claims they are owned or operated by the military.
The NYSE step, which will restrict US investor entry, follows global index providers MSCI, S&P Dow Jones Indices, FTSE Russell, and Nasdaq removing numerous Chinese firms from their indexes.
Roger Robinson, a former White House official who supports curbing Chinese access to US investors said that it’s a small measure, but at least it’s a wake-up call to national security and human rights threats.
NYSE claimed that the issuers, China Telecom Corporation, China Mobile, and China Unicom (Hong Kong), were no longer appropriate for listing, as the order bans any investments in securities “designed to provide investment exposure to such securities, of any Communist Chinese military company, by any United States person.”
Trump’s November executive order affects some of China’s major corporations.
The order aimed to give teeth to the 1999 legislation, which allowed the Department of Defense to compile a list of Chinese military firms.
The Pentagon, which has only fulfilled its mission this year, has so far named 35 firms, including the energy firm CNOOC and China’s largest chipmaker, Semiconductor Manufacturing International.
China has condemned the ban, and fund managers have said that it could help non-US investors who are in a position to buy up stocks. NYSE said that it would suspend trade of stocks on 7 January or 11 January. The issuers have the right to appeal the decision. Each of the telecommunications companies named by NYSE is also listed in Hong Kong.
Companies could not be contacted for opinions on public holidays in China.
The relations between Washington and Beijing have been highly antagonistic over the past year, with the world’s top two economies sparring behind Beijing’s treatment of the coronavirus epidemic, the imposition of national security laws in Hong Kong, and growing tensions in the South China Sea.
Separately, President Donald Trump signed a bill last month that would force Chinese firms off US stock exchanges until they meet with American auditing requirements. Market participants said this would accelerate the rush of US-listed Chinese companies to look for backup listings in Hong Kong.
