The New York Stock Exchange said that it no longer plans to delist three Chinese companies in the telecom industry. The reversal is not only a shock announcement but has deepened the confusion created by the US’s crackdown on firms they claim are linked to the Chinese military.
The plan was, to delist the companies before January 11. However, the new statement says that after further consultation with the relevant regulatory authorities, the plan has changed.
Hong Kong-traded shares in the firms (which are backed by China), rose when the news was announced. The companies are China Unicom Hong Kong, China Telecom, and China Mobile.
Investment ban risk
Since it comes in the final weeks of Donald Trump’s presidency, the move is seen as flip-flopping and shows a lack of orderliness in the way the US ban on 35 Chinese companies with links to the Chinese military, has been implemented.
Tariq Dennison, the managing director at GFM Asset Management in Hong Kong, said that it shows how dark the set of regulatory guidance in the US is, especially when the country is changing administrations.
Dennison’s fund has shares in both China Mobile New York and Hong Kong.
Logical or bizarre
The MD has almost finished unwinding New York positions, in anticipation of a need to find US clients investments with less risk exposure to bans.
Some analysts believe that the exchange was instructed to change its plan by the Office of Foreign Assets Control, which has the task of enforcing sanctions because delisting was not necessary even though the ban on investment in related companies was still in place.
The whole thing seems like a logical move since China accounts for at least a quarter of the US’s foreign income.