The latest news on January 5th. On January 4th, China’s three major telecom operators-China Mobile, China Unicom, and China, which were originally announced to be delisted by the New York Stock Exchange (NYSE, in Chinese) Telecom has been saved again! The New York Stock Exchange claimed that it would no longer plan to delist the three companies from the market. What happened behind this?
Picture from OFweek Veken
On January 4, China’s three major telecom operators announced that the depositary shares (ADS) of the three companies in the United States have entered the delisting process, which may have an impact on the trading prices and trading volume of the three companies’ stocks in Hong Kong and the United States. Earlier, on December 31, 2020, the NYSE issued a statement stating that it is proceeding with the delisting of three companies to comply with the Trump administration’s executive order prohibiting Americans from investing in “Chinese companies with military backgrounds.” In response, the Ministry of Commerce of China stated that it will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises. On the same day, the China Securities Regulatory Commission also stated that it firmly supports the three companies in safeguarding their rights and interests in accordance with the law, and believes that they can properly cope with the adverse effects of administrative orders and delisting measures; due to insufficient liquidity of the three companies’ American Depositary Receipts (ADR), the transaction volume is small , The lack of financing function, even if delisted, the direct impact on the company’s development and market operation is “quite limited.”
However, judging from the fluctuations in the share prices of the three companies in Hong Kong stocks, it is difficult to say that “the impact is quite limited.” On that day, China Mobile’s Hong Kong stocks plummeted by more than 4% to 42.20 Hong Kong dollars at the beginning of the market, reaching the lowest level since July 2006. Bit. China Unicom and China Telecom fell by more than 3.5% and 5% respectively, reaching as low as HK$4.29 and HK$2.03.
Why did the plot change suddenly?
The NYSE stated that the decision to no longer seek to delist the three companies was made “in accordance with further consultations with relevant regulatory agencies.”
After the news that China Unicom Hong Kong will not be delisted, the Hong Kong stocks of China Unicom rose 6.7%, and China Mobile and China Telecom both rose 5%.
In response, Reuters quoted Tariq Dennison, the managing director of Hong Kong GFM Asset Management, as saying: “This action shows that so far, the set of regulatory guidelines is almost meaningless, especially when the US government is about to change.” Dennison said, “I don’t think Biden will magically cool the tension… He will inherit the tense US-China relationship. He may not want the impression of immediate compromise in the first 100 days after taking office.”
Response from relevant parties
After the news of the non-delisting came out, China Unicom and China Telecom issued a statement stating that they have noticed this development and will release information in accordance with regulations. They said investors should pay attention to investment risks.
Chinese Foreign Ministry spokesperson Hua Chunying said that some political forces in the United States have continued to suppress foreign companies listed in the United States recently, reflecting the arbitrariness, arbitrariness and uncertainty of their rules and systems. Hua Chunying said, “The United States The behavior of the United States is very unwise. It will not only harm the interests of investors from all countries, but also directly damage the national interests of the United States and its own image, and damage the global status of the US capital market… We hope that the United States will respect the rule of law, respect the market, and do more to protect it. The order of the global financial market and the protection of the legitimate rights and interests of investors are conducive to the stable development of the global economy.” Hua Chunying also said, “I have noticed that China Unicom and China Telecom have already made preliminary responses to this. I also introduced China’s principled position yesterday. I want to emphasize again that the status of the United States as an international financial center depends on global companies. And investors’ trust in the inclusiveness and certainty of its rules and systems.”
The bad news is still there
According to Reuters, index provider FTSE Russell said on January 4 that according to the US Trump administration’s executive order prohibiting US investment in Chinese-funded companies accused of military background, it will take further steps from its global The stocks of three Chinese companies were deleted from the stock index.
The three companies are: China Unicom, SMIC, and Nanjing Panda Electronics. From January 7, the FTSE Russell’s FTSE Global Stock Index and FTSE China A-Share Index will delete these three companies.
FTSE Russell also stated that it will remove SMIC from the FTSE China 50 Index and remove Hikvision from the FTSE China A50 Index. In December 2020, FTSE Russell has removed Hikvision from its global stock index.
In addition, the NYSE, MSCI, S&P Dow Jones Indices, Nasdaq, London Stock Exchange and other index providers have also begun to remove some companies from the index.
Among them, the London Stock Exchange said on January 4 that since China Mobile and China Unicom are listed on the New York Stock Exchange, the Global Equity Segment (GES) of the London Stock Exchange will also begin its delisting. The procedure will take effect from the close of January 4th. According to the GES listing rules, investors can buy and sell American depositary receipts of Asian companies during London trading hours.