The New York Stock Exchange is proceeding with a plan to delist three major Chinese telecommunications firms, its second about-face this week, after U.S. Treasury Secretary Steven Mnuchin disagreed with its shock decision to give the companies a reprieve.
The pivot comes after the exchange's earlier move caught U.S. officials off guard. The exasperation reached the highest levels of the administration of President Donald Trump, who signed an executive order in November requiring investors to pull out of Chinese businesses deemed a threat to U.S. national security. The NYSE's back-and-forth moves have also sown deep confusion in global financial markets.
The decision is based on "new specific guidance received on Jan. 5, 2021, that the Department of Treasury's Office of Foreign Assets Control provided to the NYSE," the exchange said in a statement Wednesday. "The issuers have a right to a review of this determination." An NYSE representative declined to elaborate on the decision.
In Hong Kong trading Thursday, China Telecom Corp. shares dropped 9.4%, the most since 2008, while China Mobile Ltd. had its worst day since 2015 in falling 7.2%. They respectively closed at their lowest since 2008 and 2006. China Unicom Hong Kong Ltd. declined 11%.
The new guidance referenced by the NYSE was published on the Treasury Department's website shortly after the delisting announcement. The agency's Office of Foreign Assets Control, in a frequently asked questions posting, explicitly listed the three Chinese telecom firms as being on the list of prohibited companies. A spokesperson for the Treasury Department declined to comment.
Investors, exchanges and indexes had been clamoring for more details on the executive order after the Treasury Department took six weeks to issue additional guidance.