The NYSE’s plan to delist three Chinese telcos (China Mobile, China Unicom, and China Telecom) was on, then off, and now is looking to be back on again. The initial decision was driven by President Trump’s November 2020 executive order barring investment in “Communist Chinese military companies,” as well as the the Holding Foreign Companies Accountable Act (HFCAA), which President Trump signed into law on December 18th, 2020. The HFCAA requires companies publicly listed on stock exchanges in the U.S. to declare they are not owned or controlled by any foreign government and requires companies to be delisted if the PCAOB is blocked from auditing financial reports from the company. Here’s the list of Non-SDN Communist Chinese Military Companies.
The move is intended to protect U.S. investors from poor corporate governance and a lack of transparency. A side effect might restrict the ability of these companies to raise capital, though all are also listed in Hong Kong. A battle over access to capital is yet another direction the growing war with China will travel.
A secondary effect could also be that it helps Chinese-based exchanges become more influential in the global capital markets. Some of the largest companies in the world are based in China and many of them are listed in the U.S. If investors can only gain exposure to these companies through China exchanges, it could drive capital there and make them more influential on a global scale.
