After Pressure, New York Stock Exchange Will Delist 3 Chinese Firms


The New York Stock Exchange reversed course again on Wednesday, saying it will remove China’s three major state-run telecommunications companies from the exchange.

The decision followed a day of pressure from the Trump administration and Congress after the exchange had decided to let the companies — China Unicom, China Telecom and China Mobile — remain listed. That twist came a week after the exchange said the companies’ shares would be delisted to comply with President Trump’s executive order on China investments.

The exchange said in a statement on Wednesday that it was complying with U.S. law after receiving “new specific guidance” from the Treasury Department’s Office of Foreign Assets Control.

The delisting is likely to further inflame tension between the United States and China in the final days of the Trump administration. The back-and-forth also reflected the lingering tensions within the administration about how hard a line to take against China. The Defense and State Departments have sought a more expansive reading of Mr. Trump’s executive order to block Americans from investing in companies tied to the Chinese military.

Treasury Secretary Steven Mnuchin, who had initially supported greater accommodation of Chinese companies, pushed on Tuesday for the companies to be delisted after Senator Marco Rubio, Republican of Florida, and Pentagon officials expressed anger that they would remain on the exchange. The Treasury secretary, who was traveling in Egypt on Tuesday, called Stacey Cunningham, president of the N.Y.S.E. Group, to voice his objection to the decision not to delist and issued updated guidance.

A person familiar with the process said the Treasury Department provided the exchange with new guidance on Tuesday night that made clear the companies were covered by the executive order.

A big open question is whether the incoming administration of Joseph R. Biden Jr. will leave Mr. Trump’s executive order intact, said Edward Moya, senior market analyst at Oanda, a foreign exchange platform.

“If Biden leaves Trump’s executive order alone, Wall Street’s big shops and pension funds will have to liquidate their holdings by Nov. 11,” Mr. Moya said, noting the grace period included in the order. “Investors should not be surprised with these Chinese delistings, since Trump’s hard-liners have been talking about this since August.”

The stock exchange had said a week ago that it would move ahead with the delistings before backtracking on Monday night after what it said were consultations with American regulators. The apparent reprieve led to a sharp rise in the companies’ New York-listed stocks on Tuesday, with China Unicom, for example, gaining nearly 12 percent on the day.

In explaining the initial reversal, the exchange pointed to ambiguity in the White House order about whether it applied to subsidiaries and affiliates. The latest reversal pushed the stocks back down on Wednesday, but not enough to erase all the previous day’s gains. Over the past year, the companies have each lost more than 30 percent of their value.

China’s securities regulator said in a statement at the start of the week that the companies’ New York listings were worth around 2 percent of their total stock values. Daily trading volumes for the companies’ shares in New York are typically a small fraction of the much-larger Hong Kong listings.

“The suppression against Chinese companies will have very limited direct impact on them, but at the end of the day, the national interests and image of the United States and the global standing of the American capital market will suffer,” Hua Chunying, a spokeswoman for China’s Foreign Ministry, said on Wednesday.

MSCI, FTSE Russell and S&P Dow Jones Indices have dropped Chinese firms from their global indexes in recent weeks after American restrictions on owning their shares. The New York Stock Exchange will stop trading of shares in the Chinese telecom companies on Monday.

The move to delist won praise from some members of Congress who had been pushing for the United States to sever financial ties with China.

“Chinese firms that reject fundamental transparency requirements and have ties to the Chinese military shouldn’t benefit from American investment,” Senator Ben Sasse, Republican of Nebraska, said on Wednesday.

Jason Karaian contributed reporting.



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