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NYSE may make second U-turn on China telecom delistings amid confusion over policy

Stock MarketsJan 06, 2021 09:00AM ET
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2/2 © Reuters. FILE PHOTO: Signs of China Telecom, China Mobile and China Unicom are seen during the China International Import Expo at the National Exhibition and Convention Center in Shanghai 2/2

By John McCrank, Alexandra Alper and Pei Li

NEW YORK/WASHINGTON/HONG KONG/ (Reuters) - The New York Stock Exchange is reconsidering its plan to allow three Chinese telecom giants to remain listed, the latest twist to a saga amid confusion over rules set by the Trump administration and tension within Washington on China policy.

If it does so, it would mark a second sudden U-turn. The bourse said late Monday it reversed a decision announced just last week to delist China Mobile (NYSE:CHL) Ltd, China Telecom (NYSE:CHA) Corp Ltd and China Unicom (NYSE:CHU) Hong Kong Ltd after consulting with regulatory authorities in connection with the U.S. Treasury's Office of Foreign Assets Control.

The about-face was due to ambiguity over an executive order issued by President Donald Trump barring investment in firms Washington says are tied to the Chinese military, and whether the three firms were banned under the order, a source familiar with the matter said on Tuesday.

However, it will go ahead with the delistings, which were planned on or before Jan. 11, if it deems the companies are subject to the order, said the person who asked to remain anonymous because the discussions are ongoing.

Bloomberg earlier reported that the NYSE may flip back.

U.S. Treasury Secretary Steven Mnuchin phoned New York Stock Exchange President Stacey Cunningham on Tuesday to tell her he disagreed with the exchange operator's decision to reverse course on the delistings, a separate source said.

Coming in the final days of the Trump presidency, the back and forth at the NYSE underscored the lack of clarity about, and the tensions around, the implementation and implications of the administration's ban on investment in 35 Chinese companies.

One China expert who has worked with Congress on delisting issues said the NYSE may have made the U-turn if they sought clarity from Treasury about the rules and been told they did not need to delist.

Republican Senator and China hardliner Marco Rubio expressed outrage that the U.S. Treasury may have caused the NYSE to wind back the delisting procedures.

"If it is true that someone at (Treasury) advised (NYSE) to reverse the decision to delist these Chinese companies, it was a outrageous effort to undermine (President Trump's) Executive Order," he tweeted.

The Treasury declined comment on the NYSE decision. OFAC, which is responsible for enforcing sanctions, declined comment.

The NYSE is owned by Atlanta-based Intercontinental Exchange Inc (NYSE:ICE), which is run by billionaire Jeffrey Sprecher, whose wife Kelly Loeffler, also a former ICE executive, is one of two Republican senators facing run-off elections on Tuesday in Georgia. Loeffler is a staunch Trump supporter.

NEW GUARD

The flip-flopping at the Big Board also sowed confusion among investors.

Tariq Dennison, managing director at GFM Asset Management in Hong Kong, said he had almost completely unwound his positions in China Mobile shares in both Hong Kong and New York, partly in anticipation of needing to find investments for U.S. clients with less exposure to risks associated with the investment ban.

The are also questions about how the order will be handled by President-elect Joe Biden who is set to take office on Jan. 20 and could revoke it easily. His transition team has not commented on plans for the directive.

William Kirby (NYSE:KEX), a Harvard Business School professor focused on China, said on Monday that whereas the Trump administration has taken a "one-size-fits-all" approach to its regulation of Chinese companies, the Biden administration would likely have company-by-company reviews.

Miller said that while the last year had seen toughening policies on investment flows into Chinese companies, "many of these rules are likely to fall by the wayside."

FLIP-FLOP

The executive order banning U.S. investors from buying shares of companies Washington alleges are owned or controlled by the Chinese military technically takes effect on Jan. 11 but does not ban purchases until November 2021.

While the directive stops short of forcing a delisting, a separate bill signed into law by Trump in November will kick Chinese companies off U.S. bourses if they do not fully comply with the country's auditing rules in three years.

S&P Dow Jones Indices said on Wednesday it would no longer remove the three firms' ADRs, which had been due to be deleted before Jan.7, from its benchmarks after the NYSE's latest decision.

Other index makers including FTSE Russell and MSCI Inc have cut a dozen Chinese companies on the list from their benchmarks, but have not removed the three telecom firms, all of which have major passive U.S. funds amongst their top shareholders.

The three telecom firms said in statements that they had taken note of the NYSE's latest announcement and would release information in accordance with regulations, adding that investors should pay attention to investment risks.

Chinese foreign ministry spokeswoman Hua Chunying told a regular briefing on Wednesday that some political forces in the United States were continuing with an unreasonable suppression of U.S.-listed foreign firms, which she said highlighted the arbitrary nature of its policies.

"We hope the U.S. respects the legal system and the market," she said.

(Corrects paragraph 18 to clarify the sanctions' timing)

NYSE may make second U-turn on China telecom delistings amid confusion over policy
 

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Comments (37)
Kaveh Sun
Kaveh Sun Jan 05, 2021 9:28PM ET
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China Biden made the call to reverse. Then Steven made the call today to reverse China Biden. Reuters made it was all Steven flipflopped back n forth.
MK MK
MK MK Jan 05, 2021 4:12PM ET
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So, China shows who is number one in world :)  United banana republics are so helpless
Daniel Lu
Daniel Lu Jan 05, 2021 1:45PM ET
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Insiders buy at lows and benefit from this political game
Jason Zou
Jason Zou Jan 05, 2021 6:58AM ET
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All these nuts in the office should be sent to some re-education camps in China for job qualification before taking their jobs.
Kwong To
Kwong To Jan 05, 2021 6:58AM ET
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All the goons from Trump administration should go too.
Chuck Meaffer
Chuck Meaffer Jan 05, 2021 4:57AM ET
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Any chance this gives BABA a boost?
Yelen Shim
Yelen Shim Jan 05, 2021 4:57AM ET
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Had nothing to do with Baba.
Kwong To
Kwong To Jan 05, 2021 4:57AM ET
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Fat chance.
Rob Omes
Rob Omes Jan 05, 2021 4:37AM ET
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This is amazingly unprofessional behaviour. I am counting the last day's from Trusty Trump. The ***with him.
Jurgen Daub
Jurgen Daub Jan 05, 2021 4:37AM ET
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how tu spell trusty? ...LOL
Jason Zou
Jason Zou Jan 05, 2021 4:37AM ET
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Jurgen Daub How to spell TO? No laughing matter here, just a simple IQ test.
Jasper Yu
Jasper Yu Jan 05, 2021 3:39AM ET
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NYSE should be liable for the losses investors incurred due to its irresponsible action. Delisting is not a joke...
Lt Koh
Lt Koh Jan 05, 2021 3:38AM ET
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SEC gas been blind in these chaos and Trump admin probably in actual plot of profiting from it!
Дмитрий Сильвестров
Дмитрий Сильвестров Jan 05, 2021 3:38AM ET
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SEC is always blind.
Gary SKY saw
Gary SKY saw Jan 05, 2021 3:17AM ET
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Typo error... Whole world
Gary SKY saw
Gary SKY saw Jan 05, 2021 3:16AM ET
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Good call... Trump cannot do what he like.. He thinks the whole is under is feet... Ask him to pay his taxes first..
George Jetson
George Jetson Jan 05, 2021 2:45AM ET
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#jackmafound
Kaveh Sun
Kaveh Sun Jan 05, 2021 2:26AM ET
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China Biden made the call to the exchange.
Gamer Turtle
GamerTurtle Jan 05, 2021 1:34AM ET
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sounds like manipulation between certain shorts and nyse in the chinese sector. lol
David David
David9 Jan 05, 2021 1:33AM ET
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Trust me...if those 3 chinese telecom were to get delisted, the China Lion was about to Roar, when the China Lion Roars, all worldwide markets would shattered....
Ric Tabisola
Ric Tabisola Jan 05, 2021 1:33AM ET
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🤣
Mister Burns
Mister Burns Jan 05, 2021 1:31AM ET
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Trumpers hate China but where do you think your MAGA hats come from? Your cult leader has paid more taxes to China than he paid in USA. Imports from China are at an all time high. But keep blaming Biden , at least you're acknowledging him as president
Matthew Johnson
Matthew Johnson Jan 05, 2021 1:10AM ET
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wow this is pretty slimy market manipulation, force retail to sell and then let it back on.
Rajesh Kumar
Rajesh Kumar Jan 05, 2021 12:20AM ET
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This starts the civil war among online readers and commentators. No more civility, every persons starts abusing others.
Kwong To
Kwong To Jan 05, 2021 12:20AM ET
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Blame it on Trump.
Jo Pa
Jo Pa Jan 05, 2021 12:15AM ET
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China blackmailed an NYSE executive.
Дмитрий Сильвестров
Дмитрий Сильвестров Jan 05, 2021 12:15AM ET
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Or NYCE executives were blackmailing Chinese executives.
Janet Chou
Janet Chou Jan 05, 2021 12:08AM ET
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Americans are such a joke. Trump asks you to do ********and you do it. Then China says, you dare? Americans says sorry, nm! What a joke!
Show previous replies (1)
David David
David9 Jan 05, 2021 12:08AM ET
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How do you know Jack Ma disappeared? He is probably taking a nice long vacation...
Rajesh Kumar
Rajesh Kumar Jan 05, 2021 12:08AM ET
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David David You must be hallucinating. It is in news all over the world. No one has seen JackMa in over 2 months. He is CEO of Alibaba, not a retired person who will go on a vacation for 2 months.You should definitely get your brain checked. Listening to CCP’s propoganda and lies, turns brain into smelly sticky ******** You should definitely flush your brain into toilet as it cannot be healed back to normal state which does not get influenced by CCP propoganda. You are a gone case.
Xin Zhang
Xin Zhang Jan 05, 2021 12:08AM ET
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my man, you can't read Chinese, right? He was in small company meetings for businesses, he just didn't come to public sights recently. The hammering on BABA company is probably very political in my opinion.
Tony Ab
Tony Ab Jan 05, 2021 12:08AM ET
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Rajesh Kumar dont waste your time dude, plenty of CCP trolls here .
Janet Chou
Janet Chou Jan 05, 2021 12:08AM ET
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Last I checked, CCP is still a communist country. If they want someone disappear, someone disappears. Why is that a surprise? Personally I don't care much about Jack Ma, wish him luck.
Options Trader
Options Trader Jan 05, 2021 12:05AM ET
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nothing to see here folks...move along
Yılmaz Türk
Yılmaz Türk Jan 05, 2021 12:03AM ET
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This is clear now. With this behaviour USA proved that it is full of corruption.. I didn't panic and sell my shares in CHL, I am going to move them to Hong Kong. Having said that, from now on, I would think twice before investing in the US. US is not aware that it has just lost the trust of many international investors!
Pablo Blanc
Pablo Blanc Jan 04, 2021 11:58PM ET
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The ******begins china can ****a big slong
Ronald Maloney
Ronald Maloney Jan 04, 2021 11:46PM ET
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so the biden china love affair begins
Gary SKY saw
Gary SKY saw Jan 04, 2021 11:46PM ET
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What about trump Russia love affairs? One sided guy
GJ DJT
GJDJT Jan 04, 2021 11:46PM ET
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let's see if Biden invite Chinese official to the WH with out US press.
Ronald Maloney
Ronald Maloney Jan 04, 2021 11:45PM ET
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so the biden china love affair begins
Kwong To
Kwong To Jan 04, 2021 11:45PM ET
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Trump got to butter his rear when he meets Putin.
Junk Man
Junk_Man Jan 04, 2021 11:35PM ET
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More like manipulation...
 
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