NYSE Takes Heat to Flip-Flop on Chinese Companies

The assignment was one of the last salvos by mr. Trump to make Beijing difficult and put the NYSE in a difficult situation, as the stock exchange has long welcomed the initial public offering of companies from China.

While on a trip to Egypt, Finance Minister Steven Mnuchin called NYSE President Stacey Cunningham to protest against the reversal of the exchange operator, a Trump official said. Mr. Mnuchin supports NYSE’s original plan to delist the companies, the official added.

The news about his call to me. Cunningham was previously reported by Bloomberg News. A spokesman for the NYSE, quoted by Intercontinental Exchange Inc. owned, did not want to comment on the call from Mr. Mnuchin nie.

The movements of the NYSE have also upset investors about the ultimate impact on the companies involved, all of which are telecommunications: China Mobile Ltd.

CHL 9.27%

, China Telecom Corp.

CHA 8.83%

and China Unicom (Hong Kong) Ltd.

CHU 11.82%

The three stocks went on a wild ride, first tumbled and then bounced back after the NYSE’s actual face.

The Big Board said on December 31 that it would remove the U.S. depository receipts from the three companies to comply with Mr. To meet Trump. Then, late Monday, the NYSE said in a notice that it was putting the delisting process at risk, citing “further consultation with the relevant regulatory authorities”. The Monday notice was linked to a clue recently issued by the Treasury Department clarifying which businesses are affected by the executive order, but the NYSE gave no other explanation.

A person familiar with the matter said on Tuesday that the NYSE had reversed its decision due to ambiguities as to whether the three telecommunications companies had been instructed by Mr. Trump is covered. If and when there is formal confirmation that the three companies will be covered by the order, the NYSE will remove it, this person said.

Lawyers not affiliated with the NYSE said there was possible confusion about which companies are covered under the order and when the trading ban will take effect.

“There was clearly some kind of new information or miscommunication that caused them to change direction within a few days,” said Alan Seem, a partner at law firm Jones Day.

“The last thing the NYSE wants to do is delist these Chinese companies,” he said. Seem added, who in a previous job worked on the IPOs of China Mobile, China Telecom and other Chinese companies.

Mr. Trump’s November order identified 31 “Communist Chinese military companies” and banned trading in their shares from January 11. However, it did not specify in detail which subsidiaries and subsidiaries of the companies could also be covered by the trade ban. The ambiguity led to a fight between the various agencies over the scope of the ban, The Wall Street Journal reported in December.

The treasury issued guidelines on December 28, saying the ban would apply to subsidiaries owned 50% or more by Chinese black companies. It will own the three telecommunications companies listed on the NYSE, which are majority owned by blacklisted companies.

According to the guideline document, the ban on subsidiaries will only come into effect 60 days after the treasury department has formally named which subsidiaries are covered by the order. The department has not yet taken that step. Possibly, it could save the three telecommunications companies listed on the NYSE, as the incoming administration of Pres. Joe Biden can reverse the ban before it takes effect.

The NYSE quoted the December 28 guidelines when it reversed the delisting decision. It is unclear why the exchange continued with the signing of New Year’s Eve, although the Treasury Department did not name the subsidiaries covered by Trump’s order. Stock exchanges are strictly regulated and usually work closely with their supervisory agencies in Washington.

Some fans of mr. Trump’s tough stance on China has exploded the NYSE due to the fact that it has everything to do with it.

“Once again, Wall Street has chosen the Chinese Communist Party over the economic and national security interests of the United States,” Christopher Iacovella, head of the American Securities Association, a brokerage group, said in a statement.

“The American people deserve an explanation for this unimaginable turnaround,” he said. Iacovella added, whose group listed the strictest restrictions on Chinese shares.

The person familiar with the matter intends to comply with the NYSE’s order.

Some investors have been hit hard by the NYSE’s moves. One individual investor said he had suffered a huge loss on shares in China Mobile due to the NYSE’s original decision to delist the company.

He holds the shares in the hope that Mr. Biden would eventually reverse Trump’s order, but decided to sell after his brokers informed him that investors could have trouble liquidating the shares, the investor said. This notice forced him to sell the shares at a loss just before the NYSE revoked its decision.

China Mobile’s NYSE-listed shares fell 5.9% on Monday before the reversal was announced, and then rose 9.3% on Tuesday.

—Paul Kiernan contributed to this article.

Write to Alexander Osipovich by [email protected]