3 Chinese telecom carriers will be delisted from NYSE after losing appeals over a Trump-era investment rule

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Staff members use their smartphones at a China Mobile display during the PT Expo in Beijing Oct. 14, 2020.

  • Shares of three Chinese telecom companies will be delisted from the New York Stock Exchange, The Wall Street Journal reported.
  • The appeals of China Mobile, China Unicom, and China Telecom against being delisted were rejected.
  • The ban was introduced during the tail end of the Trump administration.
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Shares of three major Chinese telecom carriers will be delisted from the New York Stock Exchange after their appeals against being delisted were rejected, based on separate filings in Hong Kong, The Wall Street Journal reported Friday.

China Mobile, China Unicom (Hong Kong), and China Telecom all said they expect the NYSE to request permission from the Securities and Exchange Commission to delist their American depositary receipts. This will take effect 10 days after the SEC is informed.

Former President Donald Trump on November 12, 2020, issued an order barring investments in publicly traded companies that the US government believes are owned or controlled by the Chinese military.

There had been a period of some back and forth, with the NYSE at one point reversing its decision before saying it would go ahead with the move to delist the shares. But when Joe Biden took office in January, the three companies asked the exchange to revisit its decision.

Trading of the American depositary receipts – securities that allow US investors to trade in foreign companies – of all three companies has been suspended since January 11.

But investors can still exchange those ADRs for shares by returning them to the Bank of New York Mellon, according to The Wall Street Journal.

The November order prompted index makers including FTSE Russell and MSCI to cut a dozen Chinese companies on the list from their benchmarks.

The Holding Foreign Companies Accountable Act, signed into law in December 2020, will require certain foreign companies identified by the SEC to disclose their shareholder information. This puts some Chinese companies at risk of being delisted as China in the past has been known to refuse the US Public Company Accounting Oversight Board to audit Chinese firms, often citing national security concerns.

The SEC in March said non-compliance for three consecutive years will get companies kicked off from the NYSE or Nasdaq.

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Something weird just went down in the stock market, and Wall Street is speculating it’s the result of a fund liquidation

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Traders work during the closing bell at the New York Stock Exchange (NYSE) on March 18, 2020 at Wall Street in New York City

  • A selling spree on Wall Street erased $35 billion from the values of stocks of major companies Friday.
  • The selloff appears to be in part the result of the “forced liquidation of positions” held by Archegos Capital Management, CNBC reported.
  • Goldman Sachs liquidated $10.5 billion worth of stocks in block trades, Bloomberg reported.
  • See more stories on Insider’s business page.

A selling spree erased $35 billion from the stock values of major Chinese tech and US media companies Friday, and Wall Street is speculating it was in part driven by the forced liquidation of an investment firm’s holdings.

Shares of ViacomCBS and Discovery fell as much as 35% Friday, while US-listed shares of China’s Baidu, Tencent Music, Vipshop and others also plunged this week. The selloff came as the broader US market ended the week higher, with the Dow closing up over 450 points, buoyed by optimism over the pace of coronavirus vaccinations.

The selloff in the Chinese internet ADRs and US media shares was in part due to the “forced liquidation of positions” held by Archegos Capital Management, CNBC reported, citing a source familiar with the situation.

Archegos describes itself as a family investment office focusing on equity investments primarily in the US, China, Japan, Korea and Europe. Archegos is run by Bill Hwang, the founder of the now defunct Tiger Asia Management. Hwang’s fund is “known for employing leverage,” IPO Edge reported.

The group did not immediately respond to Insider’s request for comment and its website appeared to be offline on Saturday.

Goldman Sachs and Morgan Stanley liquidated large holdings this week, the news site IPO Edge was first to report, adding that the two investment banks have ties to Archegos. The move likely came after Archegos was unable to meet a margin call by an investment bank, CNBC and IPO Edge reported, citing sources familiar with the matter.

Bloomberg reported Saturday that Goldman Sachs liquidated $10.5 billion worth of stocks in block trades, where banks look to find buyers for big stock positions. The block trades included $6.6 billion worth of shares of Baidu, Tencent and Vipshop before the US market opened on Friday morning, Bloomberg reported, citing an email to clients.

Goldman then sold $3.9 billion worth of shares in media giants ViacomCBS and Discovery, as well as luxury fashion retailer Farfetch, and others, according to the report.

Goldman Sachs did not immediately respond to Insider’s request for comment.

Morgan Stanley also led share offerings on behalf of an undisclosed shareholder or shareholders, Bloomberg reported. Some of the trades exceeded $1 billion in individual companies, Bloomberg reported, citing its own data.

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