Shares of the three major telecom companies, China Telecom, China Unicom and China Mobile, saw sharp shocks on the Hong Kong stock market on the first trading day of the New Year, falling by up to nearly 6 percent as a result of the delisting action taken by the U.S. New York Stock Exchange.
At one point, China Mobile’s share price fell 4.5 percent heavily. China Telecom shares fell as much as 5.6 percent. China Unicom’s shares also fell 3.8 percentage points. However, by the end of the trading day, all three stocks had largely recovered lost ground.
Last Thursday, the New York Stock Exchange announced it would follow a U.S. presidential executive order to initiate delisting proceedings for the three Chinese companies. Their stocks and bonds will cease trading from Jan. 7 to 11. The NYSE also said that more Chinese companies will be forced out of the U.S. securities market in the future.
President Trump issued an executive order in December 2020 banning all Americans and U.S. institutions from investing in Chinese companies with military backgrounds. The U.S. Department of Defense added 35 Chinese companies to the list of Communist Party of China military-related companies under existing law.
According to the China Securities Regulatory Commission, the three Chinese state-owned companies trade their shares and bonds on the NYSE through American Depositary Receipts. The total market value of the three companies’ securities traded on the NYSE is less than 20 billion yuan, or about and $3.1 billion, and represents only 2.2 percent of their three total stakes.
According to the Wall Street Journal, the three Chinese companies said several of their ADS holders can convert their depositary receipts into common shares listed in Hong Kong through the Bank of New York Mellon.
In the past year, the U.S.-China relationship has seen its most serious difficulties since the establishment of diplomatic relations between the two sides. The viral pandemic, the deteriorating situation in Hong Kong, and fundamental changes in the situation in the South China Sea and Taiwan Strait have made the U.S. political establishment aware that the Chinese Communist Party has become the greatest threat to U.S. national security.
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