SHANGHAI (Reuters) – China’s three largest telcos saw their shares in Hong Kong fall by a whopping 5% on Monday, the first trading session since the New York Stock Exchange (NYSE) said it would scrap the companies under a plan that China considered ‘political And with a “limited” impact.
The NYSE said Thursday it would scrap China Mobile Ltd, China Telecom Corp Ltd and China Unicom Hong Kong Ltd following the US government’s decision in November to block investments in 31 companies it said are owned or controlled by the Chinese army.
The China Securities Regulatory Commission said in a question-and-answer on its website on Sunday that the plan was “politically motivated.”
The move “completely ignores the actual situation of the relevant companies and the legitimate rights and interests of global investors and seriously undermines normal market rules,” he said.
The American Deposit Receipts listed by the three telcos have a combined market value of less than 20 billion yuan ($ 3.07 billion), or 2.2% of the companies’ equity, the regulator said.
“Even if delisted, the direct impact on the development and market forces of the companies is quite limited,” he said.
Shares of China Mobile fell a whopping 4.5% in Hong Kong to HK $ 42.20 on Monday, their lowest price since July 2007. China Telecom fell a whopping 5.6% and China Unicom lost 3.4% against a 0.8% rise in the benchmark Hang Seng Index.
All three said they had not received a notification from the NYSE.
In a research note, analysts from Citic Securities said the delisting decision was in line with expectations.
“The three companies have an average of only 1.5% of their shares in the US and the rest in Hong Kong, have ample liquidity and have not been fundraising in the US for 20 years. Having stocks listed in the US will only add more risk to them. “
Washington has stepped up its tough stance against China in recent weeks. In December, it added dozens of Chinese companies to a trade blacklist and accused Beijing of using them to use civilian technology for military purposes.
On Saturday, the Chinese Ministry of Commerce said it would take “necessary measures” to protect the interests of Chinese companies.
“In recent years, it has been quite normal for Chinese companies to delist their US listing or have secondary listings in Hong Kong,” Citic analysts wrote Monday. “With the delisting, the three telecom companies will have the opportunity to have their shares reassessed and reduce financial disclosure costs.”
($ 1 = 6.5250 yuan)
Reporting by Engen Tham, Wang Jing, Samuel Shen and Pei Li; Edited by Christopher Cushing