Posted on Jan 3, 2021, 5:25 PM
Some Chinese groups are now “societa non grata” on Wall Street. The New York Stock Exchange (NYSE), the world’s largest listing market, is preparing to delist China Mobile, China Telecom and China Unicom, the three telecom operators partially owned by Beijing. The exclusion will be effective between January 7 and 11.
This “delisting” is the consequence of an executive order, signed by Donald Trump in November. The latter prohibits the Americans, from January 11, any new investment in shares in 35 Chinese companies which, according to the Pentagon, would have links with the Chinese military power. Also included in this list is SMIC, the national semiconductor giant.
American investors who own shares in these companies will have to dispose of them before November 2021. Index providers, very influential given the weight of passive management in the United States (rather than buying shares, investors increasingly favor ETFs, those products that track the performance of stock market indices), have also already started to exclude certain securities in order to comply with the new decree.
A symbolic scope
A few days before the arrival of Joe Biden at the White House, it is an eminently symbolic setback for the three operators who have been seeking to internationalize for many years. Especially for China Mobile, the leading mobile operator in China and the world, with 943 million customers, including 147 million 5G subscribers.
The exclusion will have little immediate impact, however. Due to the United States’ long-standing mistrust of Chinese telecoms companies, starting with Huawei, the three operators have a very limited operational presence in the country.
Moreover, the decision does not cut them off from international investors. The three companies are also listed in Hong Kong, where their shares are moreover traded more than in the United States.