China Opposes ‘Political’ NYSE Delistings of Major Telecom Firms, Says Impact ‘Limited’

The three Chinese telecom companies have separate listings in Hong Kong and generate the entirety of their revenue in China.

China’s securities regulator on Sunday said the delisting of three Chinese telecom companies by the New York Stock Exchange is “politically motivated” and “severely undermines normal market rules and order.”

The NYSE on Thursday said it would delist China Mobile Ltd, China Unicom Hong Kong Ltd and China Telecom Corp Ltd to comply with an executive order signed by US President Donald Trump in November that bars American investment in companies that the administration says are owned or controlled by the Chinese military.

“The politically-motivated administrative order of the US government seriously breached market rules and order,” the China Securities Regulatory Commission said in a response posted on its website.

The move “completely disregards the actual situation of the relevant companies and the legitimate rights and interests of global investors and severely undermines normal market rules and order,” the regulator said.

“Even if delisted, the direct impact on the companies’ operation and development is rather limited,” it said. 

The overall scale of the American Deposit Receipts listed by the three companies is small, the regulator added, with a total market value of less than 20 billion yuan ($3 billion), or 2.2% of the total equity of the three companies. China Telecom has 800 million yuan in ADRs and China Unicom has about 1.2 billion yuan.

The commission said it will firmly support the three firms in safeguarding their rights and interests. 

China’s Ministry of Commerce on Saturday said it opposes the move and will “adopt necessary actions” to protect the rights and interests of Chinese companies, further stressing it hopes the two countries can work together to create a fair, predictable environment for businesses and investors. 

In separate statements Monday, the three telecommunications operators said they “regret” the NYSE’s actions, and they had not received any notification from the NYSE about the delisting decision.

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The three Chinese telecom companies have separate listings in Hong Kong and generate the entirety of their revenue in China, according to Bloomberg. Their shares are also thinly traded on the New York Stock Exchange compared to their primary listings in Hong Kong. 

Shares of China Mobile Ltd., the largest of the three, fell as much as 4.5% on Monday to their lowest level since 2006, while China Telecom Corp. dropped 5.6%, Bloomberg’s report added. China Unicom Hong Kong Ltd. slipped 3.6%.