Three of China’s telecommunication companies will be delisted by the New York Stock Exchange (NYSE) as part of an executive order from President Trump. This comes after NYSE’s earlier decision of not delisting the companies.
On Wednesday, the NYSE listed the shares of China Unicom Ltd., China Telecom Corp., and China Mobile Ltd. To be suspended as of Monday at 4.00 a.m. ET. These companies face the ban as part of Trump’s trade ban on companies that have links with the Chinese military.
The NYSE clarified that its latest action was inspired by a “new specific guidance” on Tuesday from the Treasury Department’s Office of Foreign Assets Control. According to the directive, these three companies were covered in the ban list.
NYSE’s Wednesday reversal will be the third U-turn it will make in its delisting decision. This will raise further questions in how it has handled the three Chinese stocks as just last week it had announced it will delist the companies only to reverse the decision on Monday.
According to a credible source, the NYSE’s confusion is based on the ambiguity in the directive on whether it covered the three companies or not. However, the new guidance shed light on the immediate delisting of the three telecom companies.
In a statement by the NYSE on Wednesday declared that the issuers had the right to review their decision. According to Bloomberg, an NYSE representative declined to expound on the exchange’s decision.
The Delisting Announcement
On Wednesday, the Treasury posted the guidance online. In the frequently asked questions section of the Office of Foreign Assets Control, the agency listed the companies on the list of prohibited companies.
So far, exchanges, indexes, and investors have been pressing for more details on the ban order since the Treasury Department’s issuance of the additional guidance.
As expected, the three Chinese companies suffered a major blow on their stocks. On Thursday’s Hong Kong trade, China Mobile Ltd. fell by 6.8%, a decline that has not been experienced since August 2015. China Telecom Corp dipped by 4.9% while China Unicom Hong Kong Ltd. dropped by 5%.
OFAC’s Market Clarity
According to Daniel Tannebaum, the head of sanctions at New York’s Oliver Wyman, the delisting list is OFAC’s way of providing market clarity. Tannebaum claims that companies being named on the FAQs section is normal, however, this time round there was a lot of commotion surrounding it.