Almost two months after President Donald Trump said he's cutting off U.S. investment in companies tied to China's military, confusion reigns on Wall Street over how to interpret his order. One certainty: Savers are losing billions.
The New York Stock Exchange is considering reversing course a second time to delist three major Chinese telecommunications firms after conferring further with senior authorities on how to interpret an executive order Mr. Trump issued Nov. 12, according to people familiar with the matter. Lawyers said the drama, whipsawing markets in recent days, is exposing the ambiguities of the government's instructions.
The trio of companies — China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. — lost more than $30 billion in market value in the final weeks of 2020 as investors pulled back following Mr. Trump's order. They shed as much as $12 billion more as their American depositary receipts tumbled Monday on the NYSE's decision to delist them. Prices climbed Tuesday after the NYSE canceled the delisting, and then they softened anew after Bloomberg broke the news that the exchange may proceed after all.
"It's a mismanaged process," said Shang-Jin Wei, a professor of Chinese business and finance at Columbia Business School. "The intent was to penalize these companies and penalize the Chinese government," he said. "The problem is it ends up penalizing U.S.-based investors."
Asset and wealth managers catering to U.S. savers are among the top holders of the three companies' ADRs, according to data compiled by Bloomberg, and sudden price swings can give an advantage to high-speed traders and hedge funds able to react quickly. China Mobile, once part of a "red chip" boom in the late 1990s, was among the Asian nation's first giants to sell shares in the U.S.
The NYSE's latest potential pivot follows a whirlwind 18 hours. The decision to keep the listings came as a surprise and sparked confusion among officials at the U.S. Treasury and State departments, and the National Security Council, and triggered exasperation that reached the highest levels of the Trump administration, according to people familiar with the matter, who asked not to be identified because the conversations were confidential.