New York Stock Exchange reverses course again on China delistings


The New York Stock Exchange on Wednesday said it would go ahead with its plan to delist three Chinese telecommunications companies next week, after drawing criticism from the US Treasury secretary over its earlier decision to keep the businesses trading on the Big Board.

NYSE said it would drop shares of China Telecom, China Mobile and China Unicom from the exchange on January 11 to comply with an executive order signed by President Donald Trump last year, which prohibits Americans from investing in businesses with ties to the Chinese military.

The decision was based on “new specific guidance” the NYSE received from the Treasury on Tuesday that forbade certain trading in the three Chinese groups, the exchange operator said.

NYSE, owned by Intercontinental Exchange, on New Year’s Eve had announced its intention to delist the three groups. Days later it abruptly reversed course, given ambiguity in advice it had received from the Treasury, according to a person briefed on the decision.

The about-face from NYSE riled hardline Republicans, including several within the Trump administration. Steven Mnuchin, the Treasury secretary, phoned NYSE president Stacey Cunningham on Tuesday objecting to the group’s decision.

Shortly after NYSE’s latest reversal on Wednesday, the Treasury moved to broaden the number of Chinese-linked entities covered by the executive order, warning that Americans could not purchase shares of subsidiaries with names that closely match companies listed in the January 11 order.

Line chart of performance (%) showing shares of Chinese telecoms whipsaw over NYSE delisting decisions

The Trump administration in recent weeks has taken a “scorched earth” approach to China, said Scott Flicker, a partner at law firm Paul Hastings. Mr Trump this week signed an executive order that would ban transactions with Chinese payment applications including Alipay, WeChat Pay and Tencent’s QQ Wallet, inflaming tensions with Beijing.

“There are a lot of political appointees who believe it is their job to push as much anti-China action out before they leave the building, in part to box in the next administration,” Mr Flicker said. “As a practical matter that won’t necessarily happen.”

New guidance from Treasury department officials charged with enforcing economic and trade sanctions might add to the chaos that brokers, exchanges and index providers were confronting as they worked to adhere to Mr Trump’s mandate, Mr Flicker added. Exchanges will be left to themselves to decide which subsidiaries have names that are “close” enough to the companies named on the executive order.

Mr Trump’s initial executive order was hastily written and contained ambiguous language, leaving exchanges and indices to largely interpret the order themselves, lawyers and executives at index providers have said. It was unclear from that initial order if subsidiaries of the named Chinese groups were among the prohibited businesses that US investors were barred from owning.

While the Treasury in late December ultimately provided guidance that subsidiaries would be covered by the executive order, it said the prohibition would take effect once the department had published a list of those affected subsidiaries.

The Treasury has not released that list, however. Without the full catalogue, NYSE and index providers believed they could allow shares in companies such as China Mobile to continue trading for as much as 60 days, according to people briefed on their thinking.

The Treasury on Wednesday explicitly named the trading symbols for the three Chinese telecommunications businesses on the NYSE, sending stocks of the three companies lower.


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