US stock exchange NYSE bans three Chinese telecom companies

Securities of the Chinese telecom groups China Telecom, China Mobile and China Unicom Hong Kong can only be traded on the world’s largest stock exchange, the New York Stock Exchange (NYSE), for a few days. They will be blocked on the NYSE by next Monday at the latest, but maybe also from next Thursday. The reason is a decree from US President Donald Trump from November 2020.

That has NYSE notified. On November 12th, nine days after his election defeat, Trump banned his citizens from trading in the securities of companies that also work for the People’s Liberation Army of the People’s Republic of China. “These companies, although ostensibly privately owned and civil, support the military of the People’s Republic of China, its secret services and security forces, and support them in their development and modernization,” writes Trump in his decree (Executive Order 13959).

By issuing securities, these companies would finance the development and modernization of the Chinese military, taking advantage of US investors. In addition to the NYSE-listed companies China Mobile, China Telecom and China Unicom, more than two dozen other Chinese companies, such as Huawei, Panda Electronics, and the surveillance technology supplier Hikvision, are affected by the ban. However, they are not listed on US stock exchanges. The list of banned public companies is kept by the US Secretary of Defense and updated on a case-by-case basis.

The trade ban also applies to derivatives, including for subsidiaries, and also for indirect investments, for example through investment funds. Whether the NYSE delisting will take effect on Thursday or next Monday depends on whether the DTCC clearinghouse would still settle purchases made on Thursday and Friday or not. DTCC has not yet commented publicly on this.

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