Shares of China’s three largest telecommunications companies fell on Monday, after the New York Stock Exchange said it would withdraw them to comply with a U.S. government ban.
In Monday morning trading in Hong Kong, the shares of the largest, China Mobile Ltd.
CHL 0.88%
, fell as much as 4.5%, placing the current year for its lowest close since June 2006. Shares of the smallest competition China Telecom Corp.
NO -0.04%
lost up to 5.6%, while China Unicom CHU -1.56%
it was down 3.8%.
The NYSE said Friday it would suspend trading in securities issued by the three companies before Jan. 11, while paralyzing trading in closed-end funds and exchange-traded products that had prohibited shares.
An executive order signed by President Trump in November will block Americans from investing in companies on January 11, according to the U.S. government that will help the Chinese military. It’s a new setback for U.S. investors in Chinese telecommunications companies. These groups rank among the world’s largest telecommunications providers, but have lagged far behind the broader markets since companies began trading in the United States more than two decades ago.
The three Chinese companies said holders of their US deposit receipts can exchange these securities for their common shares listed on Hong Kong through the Bank of New York Mellon,
which is the depository of the three ADR programs.
The trio said they regretted the U.S. measure, but stressed the low importance of their deposit receipts. These securities represent the ownership of 3.3% to 8% of the tradable shares of the companies and represent between 9% and 22% of the total trading volume, when considering both ADR shares and Hong Kong shares, as stated in separate statements.
Similarly, the China Securities Regulatory Commission said on Sunday that the combined market value of ADRs was less than the equivalent of about $ 3.1 billion and that companies could face the adverse effects of the ban and the withdrawal.
However, the financial market regulator attacked the ban, saying it was introduced for “political purposes, completely ignoring the real situation of the affected companies and the legitimate rights and interests of global investors and severely altering normal rules and orders. of the market “.
In a note Sunday, Citigroup analyst Michelle Fang said Hong Kong shares would be under pressure as shareholders liquidated ADRs to turn them into Hong Kong shares. He said the possible removal of shares from stock indices could also lead to subsequent sales.
Although the U.S. government has blacklisted unlisted parent companies of telecommunications companies, it has not added listed companies to its list. Index providers have decided to exclude some companies designated directly by U.S. authorities, but have not said they would abandon the shares of listed subsidiaries of blacklisted companies.
Write to Chong Koh Ping to [email protected]
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