Shares in China’s three major telecommunications carriers fell on Monday after the New York Stock Exchange said it would remove them to comply with the US government ban.
On Monday morning, the shares of the largest, China Mobile, traded in Hong Kong Ltd.
CHL 0.88%
, fell 4.5%, putting the stock on course for the lowest close since June 2006. Shares in smaller competitor China Telecom Corp.
CHA -0.04%
lost up to 5.6%, while China Unicom CHU -1.56%
withdrew 3.8%.
The NYSE said on Friday it would halt trading in securities issued by the three companies by Jan. 11, while trading in closed-end funds and exchange-traded products that hold banned shares will be halted.
An executive order signed by President Trump in November will prevent Americans from investing in companies on January 11, which, according to the U.S. government, are helping the Chinese military. This is a new setback for US investors in Chinese telecommunications companies. These groups are among the largest global telecommunications providers, but have lagged far behind since the companies began listing in the US more than two decades ago.
The three Chinese companies said holders of their U.S. deposit receipts could exchange the bonds for their Hong Kong-listed ordinary shares through the Bank of New York Mellon.,
which is the deposit for all three ADR programs.
The trio said they regretted the move by the US but stressed the limited importance of their deposit receipts. These securities represent ownership of 3.3% to 8% of the companies’ tradable shares, and account for 9% to 22% of the total trading volumes when both ADRs and Hong Kong shares are considered, they said in separate statements. said.
Similarly, the China Securities Regulatory Commission said Sunday that the combined market value of the ADRs is less than the equivalent of about $ 3.1 billion and that the companies could handle the adverse effects of the ban and the delisting.
However, the financial market regulator attacked the ban, saying it was set up for ‘political purposes, which completely ignore the real situation of the companies involved and the legal rights and interests of world investors and seriously disrupt normal market rules and order.’
Citigroup analyst Michelle Fang said in a statement on Sunday that Hong Kong shares would come under pressure if shareholders liquidated the ADRs to convert to Hong Kong shares. She said the possible removal of the shares from shares could also cause further sales.
Although the US government blacklisted the unlisted parent companies of the telecommunications companies, it did not add the exchange companies to its list. Index providers have decided to exclude some companies named directly by US authorities, but did not say they would drop shares in listed subsidiaries of blacklisted companies.
Write to Chong Koh Ping by [email protected]
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