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    Chinese Telecom Companies Ask NYSE to Reverse Delisting Plan

    • The Chinese telecom companies that the New York Stock Exchange is set to delist have asked for that decision to be reconsidered, according to regulatory filings submitted Thursday. In the waning weeks of the Trump administration, the NYSE said they planned to delist the companies’ shares due to an executive order barring Americans from investing in companies that do business with the Chinese military. • The Chinese government has hit 28 Trump administration officials, including former Secretary of State Mike Pompeo, with sanctions.

  • China’s Big Three State Telcos Seek Review of NYSE Delisting
    Bloomberg

    China’s Big Three State Telcos Seek Review of NYSE Delisting

    (Bloomberg) -- China’s three biggest telecommunications firms said they requested a review of the New York Stock Exchange’s decision to delist their shares more than a week ago, a move triggered by an executive order issued by former U.S. President Donald Trump.The drama surrounding the delisting, which played out over a few days with the bourse at one point reversing the decision before enforcing it again, caused wild swings in the companies’ stock as investors were left with little time to react to the various moves. It also prompted some global equity indexes to remove the securities.In separate filings Thursday to the Hong Kong Stock Exchange -- where they’re also listed -- China Mobile Ltd., China Unicom Hong Kong Ltd. and China Telecom Corp. said that written requests had been filed with the NYSE and that they’d also asked for trading suspensions to be stayed while the review is undertaken. The review will be scheduled at least 25 business days from the date the request is filed, the statements said. There’s no assurance the review request will be successful, the companies added.In its communications around the delistings, the NYSE indicated it was acting to comply with an executive order issued by Trump, barring investments in companies deemed by the U.S. to be linked to China’s military. The ambiguously worded order was part of Trump’s effort to punish China in the waning days of his presidency.The announcement of the review requests came hours after Joe Biden was sworn in as Trump’s successor in Washington on Wednesday.The former administration had been ramping up its attacks on China the past few months, imposing sanctions over human-rights abuses and in response to the nation’s crackdown on Hong Kong. The U.S. had also sought to sever economic links and deny Chinese firms access to American capital, an escalation of its moves over tariffs as part of the trade war. China’s role in the coronavirus pandemic, which has hit the U.S. more than anywhere else, hardened the Trump administration’s position against the country and its bid to become a global leader.The three companies lost more than $30 billion in market value in the final weeks of 2020 as investors pulled back from their shares following Trump’s November order. They then shed billions more after the delistings. Subsequently, they have rebounded at least 12% in Hong Kong trading since Jan. 8, supported by a record inflow of cash from the mainland.China Mobile gained 0.3% as of 11:42 a.m. Hong Kong Thursday, while China Telecom fell 2.2%. China Unicom slipped 1%. The telecommunications companies advised investors to “exercise caution” when dealing in their securities.(Updates with Hong Kong traded shares in eighth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • U.S. Blacklists Xiaomi in Widening Assault on China Tech
    Bloomberg

    U.S. Blacklists Xiaomi in Widening Assault on China Tech

    (Bloomberg) -- Xiaomi Corp. plunged a record 10% after the Trump administration blacklisted China’s No. 2 smartphone maker and 10 other companies, broadening efforts to undercut the expansion of the country’s technology sector.The U.S. has targeted scores of Chinese companies for the stated purpose of protecting national security, but going after Xiaomi was unexpected. The Beijing-based company has been viewed as China’s answer to Apple Inc., producing sleek smartphones that draw loyal fans with each new release. The company, which vies with Huawei Technologies Co. for the title of China’s No. 1 mobile device brand, also makes electric scooters, earphones and smart rice cookers.The news was “really surprising to me,” said Kevin Chen, a Hong Kong-based analyst at China Merchants Securities Co.The U.S. Defense Dept. identified Xiaomi as one of nine companies with alleged ties to the Chinese military -- which means American investors will be prohibited from buying their securities and will have to divest holdings by November.Other firms targeted include Luokong Technology Corp., Gowin Semiconductor Corp., Global Tone Communication Technology Co. and Advanced Micro-Fabrication Equipment Inc. Index stalwarts such as China’s three biggest telecom firms are already on the list.Xiaomi said in a statement it is not owned or controlled by the Chinese military, adding that it would take appropriate actions to protect its interests.Unless the ban is reversed, the smartphone maker risks being delisted from U.S. exchanges and deleted from global benchmark indexes. China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. were removed by MSCI Inc. last week.The Trump administration’s blacklistings have focused on Chinese companies with military ties and strategic value to the industry’s growth. Semiconductor Manufacturing International Corp., China’s largest chipmaker and critical to the country’s ability to build a self-sufficient tech industry, was included in December.Xiaomi was co-founded by billionaire entrepreneur Lei Jun about 10 years ago, with U.S. chipmaker Qualcomm Inc. as one of the earliest investors. It’s since expanded well beyond China’s borders, particularly into Europe and India, becoming one of the country’s more recognizable brands. It surpassed Apple in global smartphone sales in the third quarter, according to the International Data Corporation, and joined Hong Kong’s benchmark Hang Seng Index in September.The move sent Xiaomi suppliers south on Friday: FIH Mobile Ltd., which helps it assemble smartphones, plunged almost 14% after a strong rally in recent days. Component suppliers including Largan Precision Co., Sunny Optical Technology Group Co. and AAC Technologies Holdings Inc. also fell. Spreads on Xiaomi’s dollar bonds widened as much as 60 basis points Friday, according to credit traders.Read more: Xiaomi’s Market Value Tops $100 Billion, Reaching 2018 IPO GoalSeparately, the U.S. Commerce Dept. blacklisted China’s No. 3 oil company, China National Offshore Oil Corp., and Skyrizon, which develops military equipment. The Commerce designation is more severe and prohibits American firms from supplying those entities.Investors may be concerned that Xiaomi could be targeted by Commerce in the future, after the Defense Dept.’s move. Huawei was forced to sell off its Honor smartphone business after it was cut off from American suppliers, including Android-developer Google.“The risk looks high” that Xiaomi could get added to the broader Entity List, Jefferies analyst Edison Lee wrote Friday. That “would significantly impact its ability to procure components to make smartphones.”Trump’s increasingly aggressive stance towards Chinese corporations has provoked Beijing, which views the litany of U.S. actions as a threat. The government this month issued new rules to protect its firms from “unjustified” foreign laws and previously talked about creating its own Unreliable Entities list, though no concrete retaliation has emerged.Despite Friday’s selloff, some investors held out hope that the incoming U.S. administration will reverse actions taken in the twilight days of Donald Trump’s presidency.“This is not going to be a priority for the Biden administration. This ruling will be reversed before November, so we are going to hold, and not just hold but be a buyer on this weakness,” Vanessa Martinez, a partner at Lerner Group, told Bloomberg TV. “This is just like that last parting shot against China by the Trump administration.”Chen of China Merchants Securities also argued the fallout for Xiaomi may be limited.“Many investors would choose to lock in profit since the stock rallied a lot in the past year,” he said. “But I think the impact on Xiaomi would be more sentimental than fundamental. These declines could be short-lived.”(Updates with analyst’s comment in the 13th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.