Three Chinese telecommunications companies are to be delisted by the New York Stock Exchange (NYSE) because of alleged links of the company to China’s military the NYSE has said.
According to a statement released by the stock exchange, starting early January, the NYSE will stop trading of shares of China Telecom, China Mobile and China Unicom Hong Kong while the exchange will initiate delisting procedures against the companies.
The companies were “no longer suitable for listing”, it had decided the NYSE said, and added that the delisting action was being taken by it to comply with an executive order signed by US president Donald Trump in November.
Under that order, transactions in securities “designed to provide investment exposure to such securities, of any Communist Chinese military company” by any person in the US is prohibited.
The aim of the order is to stop US investors from buying or selling shares in all companies that are included in a blacklist prepared by the US government. According to the White House, these companies have links to China’s military. This move has been condemned by China.
The right to request a review of the NYSE’s decision is available to the companies that are to be delisted.
The majority of the revenues of the three companies – which are also listed in Hong Kong, come from their services of voice and data services in China. The companies have very little business in the US.
Following the executive order, a number of other Chinese companies have already been delisted from smaller US exchanges.
The November order is viewed to be a fresh effort of the Trump administration to exert pressure on China to amend what the US says is unfair trade practices by China.
In the past year, a large range of issues including economics, geopolitics, China’s handling of the coronavirus pandemic and human rights practices have resulted in an increase in tensions between the two largest economies of the world.
Any dependence of the US telecommunications industry on Chinese companies is being targeted to be removed by the White House for several months now.
According to a recommendation by the Trump administration in April, US regulators were advised to block China Telecom from operating in the US as the Trump administration warned that national security and law enforcement risks were being created by these Chinese government backed companies.
China Telecom could be vulnerable to exploitation, influence and control by the Chinese government, the US has said in its concerns about the company.
Accusing the Chinese telecom giant Huawei of stealing trade secrets, severe restrictions on the Chines firm have been previously imposed by the US government. Additionally, the Trump administration has also been successful in imposing pressure on the United Kingdom to prevent Huawei from being included in the roll out 5G networks in the country.
The US government is also targeting other Chinese companies apart from telecoms firms.
A threat to remove Chinese companies from US stock indices unless they comply with US auditing standards was essentially issued by Trump by signing a separate executive order in December.
(Adapted from TheGuardian.com)