China’s big telcos lose another US$1.5 billion of market value in sell-off on NYSE delisting plan despite late rebound

China Mobile and China Telecom lost a combined HK$12 billion in value in Monday’s sell-off while China Unicom rebounded from a 3.8 per cent slide

The trio lost HK$610 billion in market value in 2020

Reading Time:2 minutes

China Mobile slid as much 4 per cent to HK$42.45 on Monday, a level not seen since June 2006. Photo: AP Photo

Published: 5:08pm, 4 Jan 2021Updated: 12:29pm, 5 Jan 2021

China’s big telcos slumped in Hong Kong trading before a late buying support helped pare losses triggered by the New York Stock Exchange’s decision to delist their American depositary receipts from later this week.

Investors dumped China Mobile, China Unicom and China Telecom in Hong Kong in early trading on Monday on concerns the NYSE action would force investors to convert their ADRs into those traded in the city to comply with a US executive order.

The stock slump wiped out about HK$12 billion (US$1.5 billion) of market value from China Mobile and China Telecom at the close of trading. China Unicom, however, rebounded from as much as a 3.8 per cent slide. The trio saw their combined market value shrink by HK$610 billion in 2020.

President Donald Trump issued an executive order in November banning US investors from owning or trading in 35 Chinese companies linked to the Chinese military. The Treasury Department last month clarified the scope of the ban on US investors and defined the prohibited assets to include their majority-owned or controlled subsidiaries.

Major index compilers including MSCI, FTSE Russell and S&P Dow Jones Indices have reacted by removing some of the blacklisted constituent stocks and bonds from their global benchmarks.

“It is better not to place any bet” on these blacklisted stocks for now because of the big selling pressure, said Sam Chi-yung, chief strategist at Plotio Securities in Hong Kong. “Those who are looking for a quick rebound should control their risk [appetite].”