Shares of China’s three biggest telecoms fell as much as 5% on the first trading session in Hong Kong on Monday, according to Reuters. The fall reflects the New York Stock Exchange (NYSE) announcement on Thursday it would delist the firms.
- The announcement by NYSE follows the U.S. government’s move in November to block investment in 31 firms suspected to be owned or controlled by China’s military.
- China’s foreign ministry spokeswoman termed the NYSE move as “unwise,” oppressive, and reflected how “random, arbitrary and uncertain” U.S. rules can be.
- Currently, the American Deposit Receipts (ADRs), listed by the three companies have a combined market value of under 20 billion yuan ($3.07 billion) or 2.2% of the firms’ equity.
- The delisting from NYSE could cause short-term selling pressure on the stocks as the ADR shareholders may convert their holdings into Hong Kong shares before selling them.
- Analysts also project that the stocks’ potential removal from indexes such as MSCI and FTSE could lead to selling by index funds.
- Chinese telco’s operations, nonetheless, are mainly domestic-focused, and their fundamentals, recovery trend, and positive cash flow will not be affected by the delisting – Michelle Fang, Citi Analyst.
China’s telecoms stocks are currently mixed. 0941: HKG is down 0.79%, 0728: HKG is down 2.79%, 0762: HKG is up 0.45%
