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NYSE to delist three Chinese telecoms in dizzying about-face

Technology Jan 06, 2021 11:00PM ET
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2/2 © Reuters. View of NYSE building in New York City 2/2

By John McCrank and Anirban Sen

(Reuters) -The New York Stock Exchange said on Wednesday it will delist three Chinese telecom companies, confirming its latest U-turn on the matter a day after U.S. Treasury Secretary Steve Mnuchin told the NYSE chief he disagreed with an earlier decision to reverse the delistings.

The latest move, which is effective Jan. 11, marks the third time in less than a week the Big Board has ruled on the issue.

The flip-flopping highlights the confusion over which firms were included in an executive order issued by President Donald Trump in November barring U.S. persons from investing in publicly traded companies Washington deems to be tied to the Chinese military.

It also comes amid escalating tensions within Washington on China policy in the final days of the Trump administration.

"There is a unique situation where there is an outgoing administration that is disengaged and (there are) orders sitting out there, so something has to be done, but no one wants to take on responsibility," said Leland Miller, the CEO of the U.S.-based consultancy China Beige Book.

"I think in future that anyone getting these orders will say: 'Tell us exactly what you want us to do,' and force administrations to be more focused."

The NYSE originally on Thursday announced plans to delist China Mobile (NYSE:CHL) Ltd, China Telecom (NYSE:CHA) Corp Ltd and China Unicom (NYSE:CHU) Hong Kong Ltd. On Monday, it did a U-turn after consulting with regulators in connection with the U.S. Treasury's Office of Foreign Assets Control and decided to keep them listed. Wednesday's decision marks a return to the original plan.

The decision to keep the companies listed had prompted criticism that Treasury was being dovish on China.

Mnuchin has long been seen as seeking to thwart attempts by hardliners in the administration - many led by the State department - to crack down on Chinese companies.

But sources who asked to remain anonymous due to the sensitivity of the matter said Mnuchin had called NYSE President Stacey Cunningham on Tuesday to express his concerns over the decision to relist the companies, as the exchange sought further confirmation on the matter.

"The Treasury secretary was on the phone with the NYSE (president) now and was told that NYSE would reverse their decision," a U.S. official told Reuters on Tuesday.

INVESTOR COMPLIANCE URGED

On Wednesday the exchange operator said in a statement its latest decision, to move forward with the delistings, was based on "new specific guidance received on January 5, 2021, that the Department of Treasury's Office of Foreign Assets Control provided to the NYSE".

Trading in the securities will be suspended at 4 a.m. ET (0900 GMT) on Jan. 11, the NYSE said.

A spokeswoman for the exchange operator declined to comment further.

The flip-flopping caused investors to sell positions in the securities, the prices of which dropped on the initial announcement, then rose on the next, and tumbled again on Wednesday.

Republican Senator Ben Sasse, a member of the Senate Select Committee on Intelligence, said the decision was the "right call".

"Chinese firms that reject fundamental transparency requirements and have ties to the Chinese military shouldn’t benefit from American investment," Sasse said.

Trump's executive order technically takes effect on Jan. 11 but does not ban purchases by U.S. investors until November.

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.

The U.S. State Department plans to release as soon as Wednesday a fact sheet urging U.S. investors to comply with the executive order, according to three people familiar with the matter and a copy of the document seen by Reuters.

The Treasury said on Wednesday that market intermediaries could help investors divest securities of the blacklisted companies.

S&P Dow Jones Indices, which has also made U-turns in decisions, said late on Wednesday it will remove the three telecom firms' ADRs from its benchmarks before Jan. 11.

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.

NYSE to delist three Chinese telecoms in dizzying about-face
 

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Comments (12)
Jack AAA
Jack_A Jan 07, 2021 12:46AM ET
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so who will compensate my loss?
Options Trader
Options Trader Jan 06, 2021 11:26PM ET
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when you are not qualified for a regular job, you work for the government.
Bret Lafrance
Bret Lafrance Jan 06, 2021 1:49PM ET
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Reason is self seving politics, same as always, oh wait, let me get my short position on place.
ignatius benjamin
ignatius benjamin Jan 06, 2021 11:53AM ET
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There must a reason
Thinking Mind
Thinking Mind Jan 06, 2021 11:22AM ET
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NYSE is a joke
Yılmaz Türk
Yılmaz Türk Jan 06, 2021 11:15AM ET
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What a joke!
Jack AAA
Jack_A Jan 06, 2021 10:33AM ET
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corrupted administration!!!
IceIce Baby
IceIceBaby Jan 06, 2021 10:31AM ET
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I would not give access to US markets until US investors has no direct access to Chinese markets.
Mister Burns
Mister Burns Jan 06, 2021 10:21AM ET
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Noo market manipulation going on here!
Richard Canlione
Richard Canlione Jan 06, 2021 10:10AM ET
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if the directed delisting all of these Chinese companies by treasury secretary mnuchin is deemed to be in the scope of national security so be ithowever if this is an effort by the current Administration to control free market capitalism then it is a bad decision.Richard canlione
 
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