China’s three biggest telcos lose 5% in HK trade after NYSE delisting announcement

REUTERS/Denis Balibouse

China’s three biggest telcos saw their shares drop as much as 5% in Hong Kong on Monday, the first trading session since the New York Stock Exchange (NYSE) said it would delist the firms under a plan China branded “political” and of “limited” impact.

The NYSE on Thursday said it would delist China Mobile Ltd, China Telecom Corp Ltd and China Unicom Hong Kong Ltd following the U.S. government’s move in November to block investment in 31 firms that it said are owned or controlled by China’s military.

The China Securities Regulatory Commission, in a question-and-answer posted on its website on Sunday, said the plan was “politically motivated”.

The move “completely disregards the actual situation of the relevant companies and the legitimate rights and interests of global investors and severely undermines normal market rules,” it said.

The American Deposit Receipts listed by the three telcos have a combined market value of under 20 billion yuan ($3.07 billion), or 2.2% of the firms’ equity, the regulator said.

“Even if delisted, the direct impact on the companies’ development and market operation is quite limited,” it said.

China Mobile’s shares fell as much as 4.5% in Hong Kong on Monday to HK$42.20, their lowest price since July 2007. China Telecom fell as much as 5.6% and China Unicom lost 3.4% versus a 0.8% rise in the benchmark Hang Seng Index.

All three said they had not received any delisting notification from the NYSE.

In a research note, Citic Securities analysts said the delisting decision matched expectations.

“The three firms on average only have 1.5% of their shares listed in the U.S. and the rest in Hong Kong, have ample liquidity, and haven’t done any fundraising in the U.S. for 20 years. Having shares listed in the U.S. will only pose more risk for them.”

Washington has stepped up its hard-line stance against China in recent weeks. In December, it added dozens of Chinese firms to a trade blacklist, accusing Beijing of using them to harness civilian technology for military purposes.

On Saturday, China’s commerce ministry said it would take “necessary measures” to safeguard Chinese firms’ interests.

“In recent years it’s been quite normal to see Chinese firms delist in the U.S. or have secondary listings in Hong Kong,” Citic analysts wrote on Monday. “With the delisting, the three telcos will get a chance to have their shares re-evaluated and reduce financial disclosure cost.”

($1 = 6.5250 yuan)

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.