HONG KONG – Shares in China’s big three state-owned telecoms companies slid here today, the first day of trading since the New York Stock Exchange (NYSE) announced that it is delisting the firms.
Friday’s move by NYSE seeks to comply with an order by US President Donald Trump barring investment in companies with ties to the Chinese military.
As trading began here, China Mobile Communications, China Telecommunications Corp and China Unicom (Hong Kong) Ltd all dipped more than 3%.
Shares in China’s state-owned oil giants were also down on fears they could be the next to be delisted in the United States.
CNOOC Ltd was trading down 3.06%, while PetroChina dipped more than 2%.
The delisting comes as relations between the world’s two biggest economies spiral downwards over sore points ranging from trade and the coronavirus to Hong Kong and the mass incarceration of Muslim minorities in Xinjiang.
Last November, Trump signed an executive order banning Americans from investing in Chinese companies deemed to be supplying or supporting Beijing’s military and security apparatus, earning a sharp rebuke from China.
China’s telecom giants are thinly traded in the US and make the vast majority of their profits at home, meaning the delisting was little more than symbolic.
Citigroup said the expulsion from New York could encourage “short-term selling pressure”, with little long-term impact.
“Chinese telcos’ operations are mainly domestic focused, and their sound fundamentals along with recovery trends and positive cash flows will not be affected by the delisting,” said the bank in a research report, according to Bloomberg News.
Trump’s order listed 31 companies it said China was using for the “increasing exploitation” of US investment capital to fund military and intelligence services, including the development and deployment of weapons of mass destruction.
National security adviser Robert O’Brien at the time said the order would prevent Americans from unknowingly providing passive capital to Chinese companies – listed on exchanges around the world – that support the improvement of Beijing’s army and spy agencies.
China has criticised the move and threatened countermeasures.
The plunge in US-China ties has generated mixed fortunes for Hong Kong’s stock exchange, the fourth-largest in the world.
The bourse finished 2020 with its worst performance in two decades as the city remains mired in a deep recession.
But, the year also witnessed a bumper crop of initial public offerings, as Chinese firms chose to list closer to home because of the rising geopolitical tensions. – AFP, January 4, 2021
