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Business News/ Politics / News/  China says NYSE delistings of firms will have repercussions, Telcos share slides
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China says NYSE delistings of firms will have repercussions, Telcos share slides

China’s oil producer Cnooc Ltd. could be most at risk as it’s on the Pentagon’s list of companies owned or controlled by the Chinese military
  • Chinese regulator said, even if delisted, the direct impact on the companies' development is limited. US investments are nominal in these companies
  • After Telcos, Chinese oil cos fear NYSE delistings, China calls move political (AP)Premium
    After Telcos, Chinese oil cos fear NYSE delistings, China calls move political (AP)

    As the New York Stock Exchange (NYSE) plans to delist three Chinese telecom firms, the Chinese securities regulator said that the move is majorly political and the impact will be limited.

    Following President Donald Trump's move to stop US investments in 31 firms that are allegedly owned or controlled by the Chinese military, NYSE on Thursday said it would delist China Mobile Ltd, China Unicom Hong Kong Ltd and China Telecom Corp Ltd.

    Also Read | A year on, China is shaking up the world

    Chinese oil majors may be next in line for delisting in the U.S. after the NYSE said it would remove the Asian nation’s three biggest telecom companies.

    Responding to NYSE announcements, China Securities Regulatory Commission, on its official website, said, the move "completely disregards the actual situation of the relevant companies and the legitimate rights and interests of global investors and severely undermines normal market rules and order."

    Marking that the American investments in these companies are small, the regulatory commission said, "Even if delisted, the direct impact on the companies' development and market operation is quite limited."

    The overall scale of the American Deposit Receipts listed by the three companies is small, it said, with a total market value of less than 20 billion yuan ($3.07 billion), or 2.2% of the total equity of the three firms. China's commerce ministry said on Saturday it will take "necessary measures" to safeguard the interests of Chinese companies.

    China Mobile, China Unicom and China Telecom, meanwhile, said they had not received notification from the NYSE of its delisting decision.

    Shares of Chinese telecom companies, oil major falls

    Shares of China Mobile Ltd., the largest of the three, fell as much as 4.5% in early trading on Monday, while China Telecom Corp. dropped 5.6%, marking their biggest losses since mid-November. China Unicom Hong Kong Ltd. slipped 3.6%. The American depositary receipts of the three firms will be suspended from trading between Jan. 7 and Jan. 11, and the process of delisting them has started, NYSE said.

    China’s largest offshore oil producer Cnooc Ltd. could be most at risk as it’s on the Pentagon’s list of companies it says are owned or controlled by Chinese military, according to Bloomberg Intelligence analyst Henik Fung. PetroChina Co. and China Petroleum and Chemical Corp., also known as Sinopec, may also be under threat as the energy sector is crucial to China’s military, he said.

    “More Chinese companies could get delisted in the U.S. and the oil majors could come as the next wave," said Steven Leung, executive director at UOB Kay Hian in Hong Kong. At the same time, the impact of removing the telecom firms is probably minimal as they were thinly-traded in the U.S. and they haven’t raised much funds there, he said.

    A Sinopec spokesperson declined to comment. Cnooc and PetroChina didn’t immediately respond to emailed requests for comment. In Hong Kong, Cnooc fell as much as 5.7% Monday, PetroChina dropped as much as 2.5% and Sinopec was down as much as 1.4%

    US-China relationship

    Relations between the two biggest economies have come under increasing strain amid a series of disputes over issues such as trade and human rights.

    The U.S. Commerce Department added dozens of Chinese companies to a trade blacklist in December, accusing Beijing of using them to harness civilian technology for military purposes.

    Chinese diplomats have expressed hope that Biden's election will help ease the tension between the two countries.

    (With inputs from agencies)

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    Published: 04 Jan 2021, 09:02 AM IST
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