NYSE to delist major Chinese telecom operators

The NYSE has said, at the latest, that it will suspend trading in securities issued by China Mobile, China Telecom Corp.

NO -0.04%

and China Unicom Hong Kong Ltd.

CHU -1.56%

at 4 a.m. on January 11. It will act four days earlier if it does not get confirmation from the Depository Trust & Clearing Corp. that the clearinghouse will settle transactions made on January 7 and January 8.

The NYSE has said it will also stop trading in closed-end funds and exchange-traded products listed on its NYSE Arca exchange if they hold prohibited stocks.

China Unicom said on Friday that it will issue a statement in due course. China Mobile and China Telecom did not immediately respond to requests for comment.

An executive order signed by President Trump in November will prevent Americans from investing in a list of companies that the U.S. government says provide and support Chinese military, intelligence, and security services. The ban begins on January 11, and investors have until November to dispose of their holdings.

The list currently includes 35 companies – including China’s largest chipmaker – as well as surveillance, aerospace, shipbuilding, construction and technology companies.

It was not initially clear whether the order covered subsidiaries as well as parent companies and U.S. government executives vying for the scale of the blacklist, the Wall Street Journal reported in December.

However, this week the Treasury Department said it would add subsidiaries to the blacklist if they are majority-owned – or controlled – by a company that has been named. The Treasury’s Office of Foreign Assets Control, which manages economic sanctions, also said the ban covers derivatives and certificates of deposit, as well as exchange-traded funds, index funds and mutual funds. .

Last month, index compilers including MSCI Inc.,

The FTSE Russell and S&P Dow Jones Indices have said they will remove certain Chinese stocks from their benchmarks due to the order, but will not exclude stocks issued by subsidiaries and affiliates.

China Mobile, which has a market value of around $ 117 billion, was not included on the original blacklist, unlike its parent company, China Mobile Communications Group. Its US stocks are lightly traded relative to its Hong Kong stocks, according to FactSet data. About 2.1 million U.S. certificates of deposit have been traded daily on average over the past three months, compared to 34 million Hong Kong shares per day. Each ADR is equivalent to five Hong Kong ordinary shares.

Other US initiatives could also result in more write-offs. Last month, Mr. Trump signed a law that could force Chinese companies to launch U.S. markets if U.S. regulators can’t inspect their audits within three years. Some Chinese companies, including Alibaba Group Holding Ltd.

and JD.com Inc.,

have already secured secondary listings in Hong Kong, which could help mitigate the impact of such action.

Write to Chong Koh Ping at [email protected]