Sunday, 07 March 2021

Chinese telcos seek relisting on NYSE as Biden takes office

by Harry Baldock, Total Telecom
Thursday 21 January 21

Day one of the Biden administration and China Mobile, China Unicom, and China Telecom have reportedly requested that they be relisted on the New York Stock Exchange (NYSE)

Back in November 2020, an executive order from then-President Donald Trump banned US companies from investing in Chinese companies deemed to have links to the Chinese military, including the rival country’s three major telcos. Following this, after much back and forth, the NYSE took the decision to delist the three operators…

Back in November 2020, an executive order from then-President Donald Trump banned US companies from investing in Chinese companies deemed to have links to the Chinese military, including the rival country’s three major telcos. Following this, after much back and forth, the NYSE took the decision to delist the three operators, beginning on January the 11th.

This move was expected to deal massive financial damage to the share price of the Chinese telcos, with cumulative losses of up to $10 billion predicted. Indeed, investors quickly began to jump ship, with the world’s biggest asset manager, Blackrock Inc, notably selling nearly all of its China Telecom stock last week at a significant discount, for around $206 million. 
 
But the political tide in the US is changing, with Democrat Joe Biden being inaugurated as President yesterday, and the Chinese telcos have wasted no time in capitalising on this changing of the guard to seek their reinstatement to the NYSE. The telcos announced today that they had made written requests to the NYSE yesterday, asking that the delisting be overturned and trading be resumed while a committee of the index’s board of directors reviews the decision. 
 
Prior to leaving office, Donald Trump launched numerous parting blows against China, including placing Xiaomi on the investment blacklist just last Friday. This leaves incoming President Joe Biden with a diplomatic situation that is as tense as ever between the two countries and, while experts believe a dialogue between the two countries will surely improve and become less inflammatory, significant changes in policy are unlikely to manifest quickly. Biden has himself previous voiced support for a strong stance on China and is likely to focus far more on solving internal issues like the pandemic and political unrest, at least early in his term.
 
However, the specific issue of the Chinese companies listed on the NYSE could be one area where Biden could feasibly soften policy in the short term. The Chinese telcos have all been part of the NYSE for around two decades and restoring them would arguably be in the best interest of US investors.
 
 
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