China's telcos say they haven't received NYSE's delisting notification
Updated 13:20, 05-Jan-2021
By Yao Nian
The logos of China Mobile, China Unicom and China Telecom displayed on mobile phones. /VCG

The logos of China Mobile, China Unicom and China Telecom displayed on mobile phones. /VCG

China's three telecom giants, China Mobile, China Telecom and China Unicom said in their respective announcements to the Hong Kong Exchanges and Clearing on Monday that they have not received notification from the New York Stock Exchange (NYSE) on its decision to delist their American Depositary Shares (ADSs).

The NYSE would suspend trading in shares of the three Chinese telecom companies between January 7 and January 11, and proceedings to delist them have started, the exchange announced on December 31.

The move is meant to comply with an executive order issued in November by the Trump administration that imposes restrictions on companies identified as "affiliated with the Chinese military," according to the exchange's announcement.

"It's another gesture of the U.S. to decouple in technology and finance with China," Wang Dan, chief economist at Hang Seng Bank (China) told CGTN. "Losing their listing is unlikely to affect those firms as their revenues are mostly from China."

UBS said in a research note seen by CGTN that "the operational implications of the delisting is fairly limited as U.S. ADSs make up only 2-3 percent of the Chinese telcos' shares on issue."

China Mobile said the company has complied strictly with the laws and regulatory requirements of its listing venues since its listing in October 1997, and it will promptly conduct an investigation and analysis to protect its lawful rights and its securities holders.

Both China Telecom and China Unicom expected that such an action by the NYSE may have an impact on trading prices and volume of its H shares and ADSs. They said they are considering appropriate steps to safeguard their legitimate interests.

H shares of the three telecom companies slid in early trading hours on Monday, but they climbed up to previous closing prices before the trading day ended.

The three telecom companies announced that holders of the ADSs may return their ADSs to the Bank of New York Mellon in exchange for ordinary shares traded on the Hong Kong market.

Each ADS of China Mobile can be exchanged for five ordinary shares of the company, each ADS of China Telecom represents 100 H shares of the company, and each ADS of China Unicom can be exchanged into 10 ordinary shares.

China Mobile's ordinary shares held in the form of ADSs amounted to approximately 2 percent of the Company's total issued share capital as of December 31, for China Telecom it's about 0.57 percent, and for China Unicom it's roughly 1 percent.

The overall scale of the three companies' ADSs is small with a total market value of less than 20 billion yuan (about $3 billion), of which China Unicom has 1.2 billion yuan and China Telecom has 800 million yuan, according to the China Securities Regulatory Commission (CSRC).

The CSRC said Sunday that the delisting impact on the three telecom companies would be quite limited given their small amount of U.S.-traded shares, and that they can properly deal with the adverse effects of delisting measures.

Read more:

CSRC supports Chinese telecom firms protecting their rights

"More Chinese companies could get delisted in the U.S. and the oil majors (CNOOC, PetroChina and Sinopec) could come as the next wave," Steven Leung, executive director at UOB Kay Hian in Hong Kong was quoted by Bloomberg.

If the U.S. hostility toward Chinese companies were to continue, the U.S.-listed Chinese companies have alternative options and can return to Hong Kong, Shanghai, and even London to list, Fang Xinghai, vice chairman of CSRC, said in an exclusive interview with CGTN.

Read more:

CSRC vice chairman: U.S. limit on Chinese companies is 'self-sabotage'

Fang said 396 companies were listed in China in 2020, raising 470 billion yuan (nearly $72 billion) in capital, which hit a 10-year high, making China the second-largest IPO market in the world behind the United States.

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China's IPO fundraising hits decade high at $69 billion in 2020

"Chinese companies, especially state-owned, will increasingly rely on the Hong Kong market for overseas financing," Wang told CGTN.

China's Ministry of Commerce responded on Saturday, saying the country would take necessary action to protect the interests of Chinese companies and it hoped the two countries can work together to create a fair, stable and predictable environment for businesses and investors.

Read more:

China vows 'necessary measures' as U.S. delists Chinese telecom firms

Wang predicted that, "President-elect Joe Biden may not necessarily follow Trump's executive order once he takes over the office in January 20. The new administration will reevaluate the bilateral relationship and is likely adopt a milder stance towards China."

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