NYSE begins delisting China’s three largest state-run telecoms groups


The New York Stock Exchange has begun delisting China’s three largest state-run telecom groups to comply with a Trump administration executive order barring US investors from holding stakes in companies suspected of having ties to the Chinese military.

The move by the US’s largest exchange follows similar restrictions from index providers and will restrict the Chinese companies’ access to capital from American investors.

China Mobile, China Telecom and China Unicom all maintain listings in Hong Kong, which will limit the damage of being removed from the NYSE. State-backed China Mobile, the country’s largest mobile network operator, brought in $107bn in revenue last year. China Telecom had sales of $54bn and China Unicom reported $42bn.

The NYSE said the companies had the right to review the decision, with the delistings set to begin as early as January 7. 

China Mobile, China Telecom and China Unicom did not immediately respond to a request for comment.

The exchange said the decision was made to comply with an executive order signed by Donald Trump, US president, in November. The order prohibited new transactions in shares of Chinese businesses that the Pentagon alleged have ties to the Chinese military from January 11 2021 and gave existing shareholders until November to divest their holdings.

Elbridge Colby, a former Trump administration official who helped shape a tougher line on China, described the step as “long overdue”.

“It’s foolhardy to allow state-affiliated Chinese companies serving the PRC military and security apparatus to have such easy access to US capital markets,” he said.

Evan Medeiros, a former China director at the National Security Council during the Obama administration, said the presidential action sought to “hardwire” a long-term rivalry into the US-China relationship.

“This policy move, more than most previous ones, forces and accelerates economic decoupling,” he said, adding that the effort came at a time when China was opening up its capital markets to US investors. 

Beijing did not immediately respond to the news of the NYSE move on New Year’s Day, a public holiday in China. It has condemned the ban and threatened blacklistings for US companies.

The Pentagon last year published three tranches of Chinese companies with alleged military links, which have included many of the country’s largest and most powerful state-owned companies. The defence department listed two of the telecom groups in June along with Huawei and Hikvision, the surveillance camera maker. 

The US Congress also passed a defence spending bill last month that would force the Pentagon to publish annually a comprehensive directory of companies with alleged Chinese military ties, underlining the growing bipartisan consensus on taking a tougher stance on China.

The actions by the Trump administration have also forced many large index providers including MSCI, FTSE Russell, Nasdaq and S&P Global Dow Jones Indices to drop several Chinese companies that were listed by the Pentagon. 

Pressure from the Trump administration on US-listed Chinese companies has helped spur a wave of secondary listings in Hong Kong from China’s largest tech companies, including the ecommerce groups Alibaba and JD.com. Baidu, the Chinese internet company, has also indicated it is considering an initial public offering in the city.


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