Shares in three major telecom companies in China tumbled on Monday, after the New York Stock Exchange said it would remove them from the list in compliance with a US government ban.
In Monday morning trade in Hong Kong, stocks are in the largest,
China Mobile Ltd.
CHL 0.88%
, By up to 4.5%, putting the stock on its way to record its lowest close since June 2006. Shares in a smaller competitor
Chinese Telecom Corp.
No -0.04%
It lost as much as 5.6%, while
CHU -1.56%
Decline of 3.8%.
On Friday, the New York Stock Exchange said it will To stop trading in the securities issued by the three companies By January 11th, with the cessation of trading in closed-end funds and exchange-traded products containing prohibited shares.
An executive order signed by President Trump in November will prevent Americans on January 11 from investing in companies the US government says are helping the Chinese military. It is a new setback for American investors in Chinese telecom companies. These groups rank among the largest global telecommunications service providers, but have lagged significantly behind the broader markets since companies began listing in the United States more than two decades ago.
The three Chinese companies said that US Depository Receipts holders can exchange those securities for their Hong Kong-listed ordinary shares through
New York Mellon BankAnd the
It is the depositary for all three ADR programs.
The trio said they regretted the US move but stressed the limited importance of their deposit receipts. They said in separate statements that these securities account for a 3.3% to 8% ownership of tradable stocks, and account for 9% to 22% of total trading volumes, when considering both ADRs and HK stocks.
Likewise, the China Securities Regulatory Commission said Sunday that the combined market value of ADRs was less than the equivalent of around $ 3.1 billion and that companies would be able to deal with the negative effects of bans and write-offs.
However, the financial market regulator attacked the ban, saying that it was introduced „for political purposes, completely ignoring the actual situation of the companies involved, the legitimate rights and interests of global investors, and a serious disruption of the normal market rules and order.“
In a note on Sunday, Citigroup analyst Michael Fang said Hong Kong stocks will come under pressure as shareholders liquidate ADRs to convert them into shares in Hong Kong. It said the potential removal of stocks from stock indices could also lead to further selling.
While the US government has blacklisted the unlisted parent companies of telecom companies, it has not added publicly traded companies to its list. Index providers moved to exclude some companies that were named directly by US authorities, but did not say they would drop shares in listed subsidiaries of blacklisted companies.
Write to Chung Kohping at [email protected]
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