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The New York Stock Exchange is beginning the process of delisting the securities of three Chinese telecommunications companies, after President Trump last month banned U.S. investments in Chinese companies, Washington says, owned or controlled by the military.
The NYSE move, which will limit access for U.S. investors, follows global index providers MSCI, S&P Dow Jones Indices and FTSE Russell and Nasdaq in removing various Chinese companies from their indices.
It is “a small step, but at least an awareness of the risks to national security and human rights,” said Roger Robinson, a former White House official who supports the restriction on the Chinese access to US investors.
NYSE said the issuers, China Telecom Corporation Limited, China Mobile Limited and China Unicom (Hong Kong) Limited, were no longer eligible for listing because the order prohibits any trading in securities “intended to provide exposure to investment in these titles, of any Communist Chinese Military Company, by any American person.
Trump’s November executive order is impacting some of China’s biggest companies.
The ordinance was intended to sharpen a 1999 law that required the Defense Ministry to compile a list of Chinese military companies. The Pentagon, which only complied with the mandate this year, has so far nominated 35 companies, including oil company CNOOC and China’s top chipmaker, Semiconductor Manufacturing International.
China has condemned the ban, and fund managers have said it could benefit non-U.S. Investors able to recover the shares.
The NYSE has said it will suspend trading in the shares on January 7 or January 11. Issuers have the right to review the decision. Each of the telecommunications companies named by the NYSE also has a listing in Hong Kong.
China Telecom is also being criticized by the Federal Communications Commission, which said earlier in December that it had started the process of revoking the company’s authorization to operate in the United States.
The companies could not be reached for comment on a holiday in China.
Ties between Washington and Beijing have become increasingly antagonistic over the past year as the world’s two major economies vie for Beijing’s handling of the coronavirus outbreak, the imposition of a law on the national security in Hong Kong and rising tensions in the South China Sea.
Separately, President Trump signed a law last month that would kick Chinese companies off U.S. stock exchanges unless they adhere to U.S. auditing standards. Market participants said it would intensify the rush of Chinese companies listed in the United States to seek safeguard listings in Hong Kong.
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