CHL

Analysts are positive about Stellantis, the name of a new auto maker formed from the merger of Fiat Chrysler and Peugeot. But the company, while cost cutting, will need to talk about its electric-vehicle plans.

• 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.

Hours after Joe Biden was sworn in as the 46th president of the United States, China's three telecommunications companies filed requests with the New York Stock Exchange (NYSE) to review their delistings, seeking to reverse the November 2020 executive order by Donald Trump to expel them.China Mobile, China Telecom and China Unicom said they asked for the trading suspension and delisting of their American depositary shares (ADSs) to be reversed while their review request is being considered. Under NYSE rules, a review must be scheduled at least 25 business days after receiving request."Investors are cautioned that there is no assurance that the company's review request ad stay request will be successful," according to a statement by China Mobile to the Hong Kong stock exchange, the primary market where shares of the world's largest mobile phone network are traded.Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.The NYSE first announced the delisting plan on New Year's Day, in an unprecedented step to remove the ADSs of the three Chinese companies to comply with the Trump administration order that bars Americans from trading in companies with ties to China's military. All three companies are state-owned entities managed by government-appointed managers.Shares of the three telecoms companies fell amid a declining market in Hong Kong after their filing. China Telecom retraced 1.7 per cent to HK$2.29 after rising by as much as 1.7 per cent. China Mobile slipped by 0.1 per cent to HK$48.95, retuning its earlier 1.5 per cent intraday gain, while the shares of Unicom lost 1.8 per cent to HK$4.88.Trump signed an executive order on November 12 that barred American investors from owning or trading shares of 44 companies that the US claims are owned or controlled by the Chinese military. It was one of a series of moves in the waning days of his administration to limit access by Chinese companies to American capital markets and technology.American investors, including pension funds and university endowments, have until November 11 this year to divest their holdings in any designated Chinese military companies following the executive order last November.The NYSE reversed itself several times ahead of the January 11 deadline as it sought additional guidance from regulators. The exchange said it would not delist the ADSs on January 5, only to make an about turn a day later.The NYSE did not immediately respond to a request for comment outside of US business hours.Former US President Donald Trump signed an executive order in November that bars American investors from owning the stocks of 35 companies with purported ties to the Chinese military. Photo: AFP alt=Former US President Donald Trump signed an executive order in November that bars American investors from owning the stocks of 35 companies with purported ties to the Chinese military. Photo: AFPBiden is expected to take a less combative approach in US-China relations, which have deteriorated to their lowest point in decades during the course of Trump's tenure, which included a trade war and a range of disputes in everything from the origins of the Covid-19 pandemic to currency values and technology. China's parting gift to the outgoing Trump administration officials was to sanction 28 of them including former US Secretary of State Mike Pompeo.There is likely to be a "softer tone" between Washington and Beijing following Biden's inauguration, said Stephen‌ Schwarzman, the chief executive of private equity giant Blackstone Group and a Trump supporter."To not have these two countries working in a cooperative fashion seems exceptionally odd and unproductive for the citizens of both of their countries," Schwarzman said in a discussion at the Asian Financial Forum on Tuesday."It will take some time. In areas like climate, health, terrorism, as well as some economic issues, there's substantial overlap in the interests of these countries and the interests of the world," he added. "I expect to see much less tension. It would be hard to imagine escalating tension from here, frankly."Since their delistings, the telecoms companies' shares have soared in Hong Kong and the city's main benchmark hovered near 30,000 as mainland investors rushed to invest in Hong Kong stocks. Mainland funds spent HK$205.6 billion (US$26.5 billion) on Hong Kong stocks in the new year through Wednesday, according to Bloomberg data.The three Chinese telecoms companies listed their ADSs in New York following their initial public offerings in Hong Kong, giving US-based and European investors access to trade their equities during US market hours.China Mobile was among the first so-called red-chip companies to list in New York in 1997, joined by China Unicom in 2000 and China Telecom in 2002.Their stocks were lightly traded in New York before their delisting and their US investors only accounted for between 5 per cent and no more than 12 per cent of their outstanding shares.The ADSs also were fungible with their H-shares in Hong Kong, which means they could be exchanged for their counterparts, providing an exit option for investors ahead of the delisting.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.

(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.

(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.

(Bloomberg) -- The Trump administration blacklisted Chinese smartphone manufacturer Xiaomi Corp. for alleged military links along with the country’s third-biggest oil company over its drilling in the South China Sea, part of a final push to ratchet up pressure on Beijing before President-elect Joe Biden takes office.Xiaomi was one of nine firms added to the Defense Department’s list of Chinese military companies, a move that will restrict U.S. investments in its securities. Other firms include state-owned planemaker Commercial Aircraft Corp. of China Ltd., or Comac, which is central to China’s goal of creating a narrow-body plane that can compete with Boeing Co. and Airbus SE.Meanwhile, the Commerce Department’s move against China National Offshore Oil Corp., the nation’s main deepwater explorer, denies it access to U.S. technologies without specific permission. It follows a December decision to blacklist more than 60 other Chinese companies.Read more: U.S. Blacklists Xiaomi in Widening Push Against China Technology“This measure by the Trump administration once again demonstrates to the public, to the international community, what is unilateralism, double standards and bullying,” China Foreign Ministry spokesman Zhao Lijian told a briefing in Beijing on Friday. “The Chinese side will take necessary measures to ensure the legitimate and lawful rights and interests of Chinese companies, and we will stand by our companies, to protect, to uphold their rights and interests in accordance with law.”Spokespeople for Xiaomi, Cnooc and Comac had no immediate comment. China National Aviation, named on the Pentagon list, didn’t immediately respond to a request for comment.The new raft of curbs mark a late push by President Donald Trump to ensure his pressure campaign against China stays in place long after he leaves office next week. While Biden and many Democrats say they oppose Trump’s tactics on China, the restrictions will give the new president increased leverage over Beijing when his team negotiates on trade with leaders of the world’s second-largest economy.Biden’s PledgeBiden has pledged to work with allies to develop a more coherent strategy against China, though it’s not clear whether there’ll be any immediate shifts in policy. Under an executive order signed by Trump last year targeting what it calls China’s abusive business practices, U.S. investors will need to unwind stakes in designated companies by November.Read more: Biden Will Inherit a Strong Hand Against Xi, Thanks to TrumpXiaomi surpassed Apple Inc. in smartphone sales in the third quarter, according to the International Data Corporation. It joined Hong Kong’s Hang Seng Index in September after grabbing market share from Huawei Technologies Co. as U.S. sanctions on Huawei deepened.Unless the ban against Xiaomi 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, while S&P Dow Jones Indices will drop Cnooc from its gauges next month.Xiaomi shares closed 10% lower in Hong Kong, while its suppliers also tumbled. FIH Mobile Ltd., which helps it assemble smartphones, plunged 14%. 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 40 basis points Friday morning, according to credit traders.Cnooc’s listed unit, Cnooc Ltd., fell 1.1% in Hong Kong. Cnooc is the smallest of China’s so-called big three state-owned oil majors after China National Petroleum Corp. and China Petrochemical Corp., also known as Sinopec. The company’s operations in the South China Sea have proved controversial with neighbors because China claims drilling rights in waters far from its borders, and within 200 miles of countries like Vietnam and the Philippines.“China’s reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarization efforts are a threat to U.S. national security,” Commerce Secretary Wilbur Ross said in a statement. “Cnooc acts as a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes.”The ListsThe Trump administration has now listed 44 Chinese companies effectively owned by the People’s Liberation Army under a 1999 law, which authorizes the president to potentially impose sanctions on them. Trump signed an order in November barring American investments in Chinese firms owned or controlled by the military in a bid to pressure Beijing over what it views as abusive business practices.The Department of Commerce’s blacklist, which was created last year to highlight restrictions on more than 100 businesses connected to China, Venezuela and Russia, is more severe and prohibits American firms from supplying those entities without a license.It was not immediately clear why Cnooc had been added now after it was not included in earlier listings. The ban also doesn’t apply to sales of hydrocarbons such as crude oil and also wouldn’t affect joint ventures between Cnooc and Western companies, a senior administration official, speaking on customary condition of anonymity, told reporters in a briefing Thursday.Subsidiaries of Cnooc have stakes in two U.S. shale oil and gas projects, according to Daiwa Capital Markets Hong Kong Ltd. The company also has interests in two offshore projects in the U.S. Gulf of Mexico, which are being developed alongside partners including Royal Dutch Shell Plc and Hess Corp.Other ApplicationsVarious components used in oil drilling can also have military applications, making it unsurprising that Cnooc had been targeted, said Amy Myers Jaffe, a senior fellow for energy at the Council on Foreign Relations. “It’s a hassle for Cnooc, but China has its own oil service industry and offshore industry. It’s probably not as devastating as a company that would lose access to microchips,” she said.Cnooc has been at the center of territorial disputes since 2012, when it invited foreign drillers to explore blocks off Vietnam that Hanoi’s leaders had already awarded to companies including Exxon Mobil Corp. and OAO Gazprom.Aerospace company Comac, key to China’s ambitions to deliver locally-made jets to domestic and foreign carriers, relies on U.S. suppliers for about 60% of parts for its C919 passenger aircraft.Read more: Trump Blacklisting Jolts China’s Ambitions to Take on BoeingThe Commerce Department also added Skyrizon to the military end-user list, saying it poses a threat to national security. Ross said the company’s push to acquire and “indigenize” foreign military technologies posed a significant threat to U.S. national security and foreign policy interests. Skyrizon was unable to be reached for comment.“This action serves to warn the export community of Skyrizon’s significant ties to the People’s Liberation Army,” Ross said.(Adds Chinese foreign ministry comments, closes share prices)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.

By Gina Lee

(Bloomberg) -- The largest exchange-traded fund tracking the Hang Seng Index will resume buying shares of Chinese companies included in a U.S. investment ban, marking a U-turn by State Street Corp. after it was criticized by Hong Kong’s former central bank chief.The $13 billion Tracker Fund of Hong Kong, the city’s most actively traded ETF, said in a statement late Wednesday that it reversed a decision announced just two days earlier to stop making new investments in companies included in the U.S. ban. The about-face boosted shares of China Mobile Ltd., which has swung wildly over the past week on confusion over how global investment funds would respond to the U.S. order.State Street’s initial decision had attracted scrutiny from the Hong Kong Monetary Authority and was criticized by former HKMA chief Joseph Yam in interviews with local media. U.S. banks and money managers are responding to President Donald Trump’s ban on investment in companies deemed to be owned or controlled by China’s military.State Street said in a separate statement Thursday that the ban doesn’t apply because the Tracker Fund and its manager, State Street Global Advisors Asia, are considered to be non-U.S. persons.The Asia unit “is able to continue to manage the fund’s portfolio to track the Hang Seng index, including making new investments in securities sanctioned under the Executive Order,” it said. The firm reiterated on Wednesday that the Tracker Fund is no longer appropriate for U.S. investors.The HKMA has “noted the latest developments and will continue to keep a close watch over the matter,” it said in an emailed statement.Read how Trump’s ban is spurring a Wall Street pullback China Mobile, one of the three Chinese telecommunication operators included in Trump’s ban, climbed as much as 3.4% on Thursday morning in Hong Kong. The stock has a 2.6% weighting in the Hang Seng Index, according to data compiled by Bloomberg.The Tracker Fund was set up in 1999 to dispose of shares acquired by the Hong Kong government in its fight against speculators during the Asian financial crisis. It’s now widely used by institutional investors as a proxy for the Hong Kong stock market or to hedge risks. Hang Seng Bank Ltd. provides a competing product that’s about half the size of the State Street ETF.Americans Won’t Be Banned From Investing in Alibaba, Dow Jones ReportsThe issue threatened to roil Hong Kong’s pension industry, given that eight of the city’s 18 Mandatory Provident Fund Scheme sponsors provide the Tracker Fund as an investment option, according to MPF Ratings Ltd. Among those include plans provided by Principal Trust Co. (Asia) Ltd., Fidelity and Invesco Ltd., according to the website.MSCI Inc. and S&P Dow Jones said last week they would drop Hong Kong-traded shares of China Mobile, China Telecom Corp. and China Unicom Hong Kong Ltd. from benchmarks. That prompted index-tracking funds to unwind positions at short notice, pushing the shares’ trading volume to 18 times the daily average of the previous three months.BlackRock Inc. also reduced its holdings and plans to keep selling, a person familiar with the matter said this week. The world’s largest money manager has an ETF that tracks the Hang Seng.Vanguard Group said this week that it liquidated all of its holdings of U.S. sanctioned Chinese companies.(Updates with HKMA statement in sixth 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.

• The House voted 232 to 197 to impeach President Donald Trump for “incitement of insurrection.” The vote was largely along party lines, with 10 Republicans joining House Democrats in support of impeachment. Trump has now become the first president in U.S. history to be impeached twice.

(Bloomberg) -- Two months after Donald Trump issued an executive order banning U.S. investments in Chinese military-linked companies –- and more than a day after it took effect -- the financial industry is still struggling to figure out what it can and can’t do under the new rules.The lack of clarity has prompted some Wall Street firms to err on the side of caution, meaning the ban could have a broader market impact than initially envisioned. Two bond fund managers in Asia said it has become increasingly difficult to sell notes of affected companies because many brokers have pulled back from dealing in the names. The managers asked not to be identified discussing private information.Among the questions still hanging over America’s biggest securities firms is whether Trump’s order forces them to stop facilitating investments in restricted companies for all clients, or just those in the U.S. Some firms have determined they should implement the ban globally, while others believe they can continue to trade for non-U.S. clients, people familiar with the matter said. Brokers have also come to differing conclusions on whether they’ll continue to handle sell orders.Several brokers said the situation was fluid and their interpretations of the rules are subject to change.Even those that plan to keep trading in the banned companies for non-U.S. investors have found it difficult in some cases to pinpoint who is exempt from the ban. For instance, some brokers are unsure whether they can execute trades for Asia-based mutual funds that manage money on behalf of U.S. investors. Often brokers don’t even know if the funds serve U.S. clients.The result is that Trump’s ban will likely end up restricting many non-U.S. investors, potentially adding to selling pressure in the affected stocks, bonds and derivatives and reducing their liquidity. Shares of China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. have already swung wildly over the past week as investors parsed changing and at times conflicting guidance from regulators, index compilers and the New York Stock Exchange.Whether the ban leads to further price declines remains to be seen. Some of the affected stocks soared on Monday and Tuesday, with China Mobile rallying from a 14-year low in Hong Kong, after a flood of buy orders from traders based in China. Some Asia hedge funds including Long Corridor Asset Management Ltd. have also been buying, judging the stocks to be undervalued.Questions over the scope of Trump’s ban have persisted despite several attempts by the U.S. Treasury Department to provide additional clarification on its website. Treasury didn’t immediately respond to a request for comment on Tuesday.Trump’s order applies to more than 30 Chinese companies deemed by the U.S. to be owned or controlled by China’s military. It prohibits any transaction by a “United States person” in the companies’ “publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities.”Treasury has said that the ban covers funds and index-linked products with any exposure to the companies, no matter how small. In updated guidance on Jan. 6, it said that market intermediaries can facilitate divestitures in the securities through Nov. 11. By that time, U.S. investors must be fully divested.Some big U.S. money managers have already started selling down their stakes. BlackRock Inc., the world’s largest money manager, reduced its holdings in China Mobile, China Telecom Corp. and China Unicom Hong Kong Ltd. in recent weeks and plans to keep selling, according to a person with knowledge of the matter.Vanguard Group said on Tuesday it had liquidated its holdings of Chinese companies included in the ban as of Jan. 8. That was the day MSCI Inc. removed shares of the three telecom companies from its widely followed equity indexes. FTSE Russell and S&P Dow Jones Indices have taken similar steps.Late Sunday, Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. said they will delist 500 structured products in Hong Kong to comply with the ban, including some products linked to the city’s benchmark Hang Seng Index.Hong Kong’s most active exchange-traded fund, managed by a unit of State Street Corp., initially said it would refrain from making new investments in companies covered by the ban but reversed course on Wednesday. Its initial decision had attracted scrutiny from the Hong Kong Monetary Authority and was criticized by former HKMA chief Joseph Yam in interviews with local media.China over the weekend pushed back against U.S. sanctions, issuing rules to protect its firms from “unjustified” foreign laws and allowing Chinese courts to punish global companies for complying with foreign restrictions. That could complicate plans by major Wall Street banks and their foreign rivals to expand in China as the nation opens its financial markets to attract more capital and investments. So far, the political turmoil has had little impact on the financial opening.(Updates with Hong Kong ETF resuming purchases in penultimate 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.

(Bloomberg) -- BlackRock Inc. has been selling stakes in three Chinese telecommunication providers after the U.S. put them on its sanctions list.The world’s largest money manager reduced its holdings in China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. in recent weeks and plans to keep selling, according to a person with knowledge of the matter. One of the biggest outside shareholders in the companies, BlackRock is responding to the executive order issued by President Donald Trump in November barring investments in companies deemed to be owned or controlled by China’s military.The mandate was part of Trump’s effort to clamp down on China in the twilight of his presidency. His administration has sought to sever economic links and deny Chinese companies access to American capital, especially those judged to pose a threat to U.S. national security. The order caused confusion among financial firms in the U.S. and Hong Kong, as well as at the New York Stock Exchange, which changed course several times on whether to delist the telecom companies’ American depositary receipts.Behind the NYSE’s Swerves on Delisting China Stocks: QuickTakeThe firm advised exchange-traded fund clients of changes underway.“IShares ETFs have adjusted and will continue to be responsive in accordance with their respective indexes’ treatment of securities impacted by recent U.S. sanctions on certain Chinese companies,” BlackRock said in a note to clients. “Our funds continue to function as designed -- seeking to track the performance of their indexes, trading efficiently and offering daily transparency to holdings.”A spokeswoman declined to comment further.Chinese companies affected by the ban are being removed from indexes run by MSCI Inc., S&P Dow Jones Indices and FTSE Russell.BlackRock was the second-largest holder of China Telecom shares with a 7% stake as of Wednesday, according to data compiled by Bloomberg. It owned 0.2% of both China Mobile and China Unicom shares as of Friday. The New York-based firm oversaw $7.81 trillion at the end of September.Other fund managers are rushing to comply with Trump’s order. Wheaton, Illinois-based First Trust on Monday filed a supplement to the prospectus for several funds that hold these stocks, including First Trust Nasdaq Technology Dividend Index Fund, saying the companies cited in the order would be removed from their portfolios.Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. plan to delist 500 structured products in Hong Kong, recent filings show. The city is the world’s biggest market for such contracts, with more than 12,000 of them, according to Hong Kong Exchanges & Clearing Ltd.The products being withdrawn by the banks include warrants and callable bull/bear contracts on the Hang Seng Index, the Hang Seng China Enterprises Index and China Mobile. The $14 billion Tracker Fund of Hong Kong, managed by State Street Global Advisors Asia, the island’s most actively traded ETF, won’t make new investments in companies covered by the ban after saying it’s no longer “appropriate” for U.S. investors.(Updates with note to clients in fifth 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.

(Bloomberg) -- The fallout from U.S. sanctions on Chinese military-linked companies widened as banks and money managers raced to comply with a vaguely worded executive order from Donald Trump that bans new investments starting Monday.Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. will delist 500 structured products in Hong Kong, filings show. The city is the world’s largest market for such contracts with more than 12,000 of them, according to Hong Kong Exchanges and Clearing Ltd.Products being pulled include warrants and callable bull/bear contracts on the benchmark Hang Seng Index, the Hang Seng China Enterprises Index and China Mobile Ltd. The $14 billion Tracker Fund of Hong Kong managed by State Street Global Advisors Asia Ltd., the island’s most actively traded ETF, won’t make new investments in companies covered by the ban after saying it’s no longer “appropriate” for U.S. investors.Investors have struggled to get more clarity on how regulators, exchanges and intermediaries will implement the order Trump issued in the waning days of his presidency. The New York Stock Exchange said last week it will delist China Mobile and two other Chinese telecom companies. MSCI Inc. deleted the stocks from its global benchmark indexes on Friday, triggering a rush to sell that led to record trading volume in the stocks and drove China Mobile’s share price to a 14-year low.Trump’s order said designated stocks cannot be purchased by Americans starting on Jan. 11, and that holdings by Americans must be fully divested by November when transactions will be frozen.For banks, index compilers and money managers, that has added to the challenges of navigating tensions between Washington and Beijing that have increasingly entered the financial sphere. China issued new rules on Saturday to protect its firms from “unjustified” foreign laws that will allow Chinese courts to punish global companies for complying with foreign restrictions.“This will raise a big dilemma for companies,” Jingzhou Tao, an arbitrator with Arbitration Chambers, said in a Bloomberg Television interview. “On one hand you have these U.S. sanctions which you must observe, otherwise you get sanctioned by the U.S. government, on the other hand you have the Chinese government, if they say that you should not observe these sanction-related laws, then you’re in a big dilemma.”The Hang Seng Index closed 0.1% higher, taking this year’s gain to 2.5%.The delisting of Hang Seng Index products, and State Street’s warning that U.S. investors should avoid the tracker fund, show how Trump’s order is impacting investment flows beyond just the handful of Chinese companies on the U.S. sanctions list.The about 500 structured products being delisted account for less than 1% of Hong Kong’s turnover, according to Bloomberg Intelligence.Even if banned companies comprise a small fraction of a widely followed index, the sanctions could force money managers to shift billions of dollars out of products linked to that index. It’s one reason why MSCI, FTSE Russell and S&P Dow Jones Indices have all adjusted their equity gauges to remove banned companies like China Mobile. Hang Seng Indexes Co. said Friday that it has no plan to change its benchmarks for now, though it will monitor “market developments” closely.Hong Kong’s exchange said it’s working closely with banks to ensure orderly delistings. “We do not believe this will have a material adverse impact on Hong Kong’s structured products market,” the exchange said in a statement Sunday. The city’s securities regulator said it has also been in close dialogue with the affected issuers and has reminded them to carefully assess the impact of the U.S. sanctions on their products.(Updates with Hang Seng closing price in 8th paragraph. Adds Bloomberg Intelligence comment in 10th 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.

(Bloomberg) -- Having slumped under the weight of a U.S. executive order, China’s three major telecommunications companies are on the rebound in Hong Kong -- supported by a record inflow of mainland cash.Mainland traders bought a record HK$19.5 billion ($2.5 billion) of Hong Kong stocks through trading links Monday, according to data compiled by Bloomberg. China Mobile Ltd. led the gains for the country’s wireless majors, rising 5.8%. Its shares, along with those of China Telecom Corp. and China Unicom Hong Kong Ltd. declined last week as index firms said they’d remove them from their gauges to comply with U.S. sanctions, and the New York Stock Exchange said it would delist them.On Friday the three stocks were among the most actively traded through the stock connect. Mainland investors bought a net HK$11 billion of China Mobile shares, the most among all companies listed in the city, according to the latest available data from Hong Kong’s exchange. Semiconductor Manufacturing International Corp., also among Friday’s biggest net buys, has seen its stock price jump 30% over the past four sessions.“The net buying of China Mobile last week has been so strong and I have never seen it on a scale like this before,” said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong.Recent declines among some stocks identified by Washington as having military ties have made valuations attractive, said Kevin Chen, analyst at China Merchants Securities HK Co. “A lot of investors are ramping up to buy them at a very low price now, as this opportunity seldom appears. They are too cheap.” China Mobile, for example, is trading at around 7 times forward earnings, compared to around 12 times a year ago.Relentless levels of mainland money have given Hong Kong stocks resilience in the face of political upheaval and abrupt setbacks. The city last year found itself in the crossfire of U.S.-China political tensions, amplified by the sweeping national-security legislation imposed by Beijing. That sparked the biggest stock crash in 12 years and raised concerns over possible capital outflows. But the inflows keep coming.(Updates with closing prices, record mainland inflows)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.

Each week Trifecta Stocks identifies names that look bearish and may present interesting investing opportunities on the short side. Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet's Quant Ratings, we zero in on five names. While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names.

The order from the Ministry of Commerce would let Chinese companies sue in court for damages and to overturn foreign judgments. This could be a major escalation, but it depends on how the order is rolled out and enforced.

MSCI said it would drop three of China's biggest telecommunications companies from several of its global equity benchmark indices on Friday in response to a US executive order restricting ownership of companies with purported ties to the Chinese military.The index compiler said it would drop the Hong Kong-traded shares of China Mobile, China Telecom and China Unicom from its family of MSCI ACWI indices and MSCI China All Shares indices at the close of business on Friday, following further guidance from the Office of Foreign Assets Control (OFAC), an arm of the US Treasury Department.S&P; Dow Jones Indices said on January 6 it would remove the telecoms trio before the start of trading on Monday. FTSE Russell will also do the same to some of its stock, bond and other associated indexes on Monday.Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.The announcement came after the New York Stock Exchange (NYSE) said it would delist the American depositary shares (ADS) of the three Chinese telecoms beginning Monday. The NYSE originally announced on January 1 it would delist their shares, but reversed course several times this week until it received updated guidance from OFAC.The US claims China Telecom, China Mobile and China Unicom are among companies controlled by the Chinese military. Photo: Bloomberg alt=The US claims China Telecom, China Mobile and China Unicom are among companies controlled by the Chinese military. Photo: BloombergLast November, President Donald Trump signed an executive order that barred American investors, including pension funds and university endowments, from owning or trading securities of 35 companies and dozens of subsidiaries that the Trump administration claims are controlled by Chinese military.The ban on US persons kicks in from Monday and they have until November 11 to divest their holdings of similarly designated companies but cannot buy new shares starting Monday.The order is one among a flurry of moves taken in the waning days of the Trump administration against Chinese companies, including moves to limit their access to US capital markets.On Wednesday, the administration added it would ban transactions with Ant Group's Alipay, Tencent Holdings' WeChat Pay and six other Chinese apps, citing national security concerns.The Chinese telecoms stocks represented 0.07 per cent of the MSCI ACWI indices, 0.50 per cent of the MSCI Emerging Markets indices and 0.81 per cent of the MSCI China All Shares indices as of January 6, MSCI said.MSCI previously said it would drop 10 Chinese companies from its indices after they were blacklisted by the US government, including surveillance camera maker Hangzhou Hikvision and Semiconductor Manufacturing International Corporation (SMIC) and supercomputer manufacturer Dawning Information, which is also known as Sugon.Other major stock and bond index providers, including FTSE Russell and S&P; Dow Jones Indices, have taken similar steps beginning in December to drop designated Chinese stocks from their global benchmarks.In this week's announcements, S&P; Dow Jones Indices said it would remove the telecoms trio from 113 headline equity indices, and five bonds from four indices, the start of trading on Monday. FTSE Russell will also do the same to some of its stock and other associated indexes."The companies facing immediate removal from the NYSE likely aren't a major part of most US-based investors' portfolios but may present issues on the margin," said Katie Rushkewicz Reichart, Morningstar's director of US equity strategies.Actively managed funds in the US with Morningstar ratings held about US$1.3 billion worth of securities facing blacklisting as of their most recently disclosed portfolios, Rushkewicz Reichart said in a research note on Friday.The biggest effect may be on 15 actively managed funds rated by Morningstar who held nearly US$700 million of China Mobile's H shares or ADSs per their most recent disclosures, she said.Shares of China Mobile fell as much as 9.9 per cent in intraday trading in Hong Kong on Friday, while shares of China Telecom dropped as much as 10.3 per cent and China Unicom (Hong Kong)'s shares were off as much as 11.2 per cent.The ADSs of the telecoms companies traded in New York are fungible with their H-shares in Hong Kong, which means they can be exchanged for their counterparts ahead of the NYSE delisting. Each China Telecom ADS is equal to 100 shares in Hong Kong, while Unicom's ratio is 1 for 10, and China Mobile's ratio is 1 for 5.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.

(Bloomberg) -- MSCI Inc. will remove China’s three major telecommunications companies from its indexes on Friday, giving global funds just one day to adjust billions of dollars of passive investments.The index provider’s decision to cut China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. at the close of business applies to their shares in Hong Kong, which are far more actively traded than the securities due to be delisted by the New York Stock Exchange. The rush to rebalance lifted volume in all three stocks to at least 18 times the daily average over the past three months.The stocks had already swung wildly this week on confusion over whether they should be included in a U.S. ban on investments in Chinese companies with military ties. Passive investors, market makers and portfolio traders usually have weeks to prepare for significant index changes, which can be the busiest days of the quarter. One Hong Kong trader at a New York-based bank said client demand was so overwhelming on Friday that employees from other teams were pulled in to help.Shares of China Unicom sank as much as 11% in Hong Kong on Friday before paring at the close, while China Mobile and China Telecom dropped around 10%. China Mobile was the most active stock in Hong Kong, with about $5.7 billion changing hands -- the second-highest on record -- as investors conducted a series of block trades.“Obviously it’s negative --- investors got very short notice to prepare for the deletions,” said Kenny Wen, wealth-management strategist at Everbright Sun Hung Kai Co Ltd. “The reversals of these decisions has created a lot of headache and confusion.”There was more than $1 trillion invested in equity exchange-traded funds tracking MSCI indexes in November, according to the company. Global active money managers also use MSCI indexes to benchmark their positions, with about $12 trillion linked to the gauges. Some 40% of its index subscribers were based in the Americas, MSCI said in a recent presentation.S&P Dow Jones Indices also said it will remove the three telecom companies after Monday’s close, after earlier canceling plans to do so in a series of flip-flops that mirrored those at NYSE. For its part, FTSE Russell is removing China Mobile and China Telecom from its FTSE China 50 Index.The drama has confounded investors since Donald Trump issued an executive order in November barring investments in companies deemed by the U.S. to be owned or controlled by China’s military. The ambiguously worded order was part of Trump’s effort to punish China in the waning days of his presidency. His administration has sought to sever economic links and deny Chinese firms access to American capital, especially those judged to pose a threat to U.S. national security.China reiterated its opposition to the U.S. delisting action Friday, while defending the regulatory compliance of the companies. “I believe they can properly deal with the negative impacts caused by the measures,” Foreign Ministry spokeswoman Hua Chunying told a regular news briefing in Beijing.The three telcos said on Thursday that they have complied with all rules since their listing in the U.S. and they will seek professional advice to protect their “lawful rights” or “legitimate interests.” They all advised investors to exercise caution when dealing in their securities.Read more: Behind the NYSE’s Swerves on Delisting China StocksChina Mobile is among the largest stocks in the MSCI China Index, with a weighting of about 1.1%, data compiled by Bloomberg show. Hong Kong index compiler Hang Seng Indexes Co. said Friday that it has no plan to change its benchmarks for now, though its will monitor “market developments” closely.One question still hanging over the market is whether China seize on the moves by MSCI, NYSE and others to retaliate. Some analysts have speculated Beijing may hold fire until after authorities get a better feel for how America’s policies on China will evolve after Joe Biden enters the White House later this month.Also unclear is whether large investment firms such as BlackRock Inc. and Vanguard Group will adjust their product offerings to accommodate international funds that still want exposure to stocks affected by the U.S. ban. The firms, along with many others on Wall Street, have been ramping up their businesses in China after the country relaxed restrictions on foreign financial companies last year.Investors are also watching closely whether the U.S. will expand its restrictions to cover other blue-chip Chinese companies. Alibaba Group Holding Ltd. and Tencent Holdings Ltd. led a selloff in tech stocks on Thursday after reports that the Trump administration is considering adding them to its list of banned companies. (Updates market prices thoughout. Adds China Foreign Ministry comment in 8th paragraph, Hang Seng response in 11th 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.

China Mobile (NYSE: CHL), the largest telecom company in China, and its two smaller peers, China Telecom (NYSE: CHA) and China Unicom (NYSE: CHU), were all recently targeted with a delisting order from the Trump administration. Last November, President Donald Trump issued an executive order that barred American citizens from purchasing shares of U.S.-listed Chinese companies with alleged ties to the Chinese military after Jan. 11. On New Year's Eve, the New York Stock Exchange announced it would suspend trading in all three companies from Jan. 7 to Jan. 11 and start the delisting process.

(Bloomberg) -- 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.‘Market Clarity’“It’s clear OFAC is trying to provide market clarity around the delisting situation we’ve been witnessing, for the avoidance of all doubt on why certain decisions may be made,” said Daniel Tannebaum, head of sanctions at Oliver Wyman in New York. “You certainly have seen companies named in prior FAQs before, but without the type of kerfuffle we’ve witnessed this week.”This is “essentially OFAC putting out a FAQ to justify the actions taken,” he said.Mnuchin entered the fray Tuesday, calling NYSE Group Inc. President Stacey Cunningham to express his displeasure with the decision to let the three firms keep trading on the Big Board, according to people familiar with the matter.The NYSE first announced it would delist the companies on New Year’s Eve, before changing course four days later. The initial decision was meant to comply with Trump’s order, but the exchange reversed itself after questions emerged over whether the companies were actually banned, according to people familiar with the matter. The Treasury provided specific guidance directly to the NYSE on Tuesday night, paving the way for the latest delisting announcement, one of the people said.The trio of companies lost more than $30 billion in market value in the final weeks of 2020 as investors pulled back following Trump’s order, then 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 softened again after Bloomberg reported that the exchange may proceed after all.“It’s odd for the NYSE to get this so wrong,” said Bloomberg Intelligence analyst Larry Tabb. “Their marketing and public relations team has historically been one of the best. It’s bad enough to do a 180 on this within a week, but to go 360 degrees on such a major move so quickly means that they either got this terribly wrong, or there was significant outside pressure driving these decisions.”Trading BannedThe order bans trading in the affected securities starting Jan. 11. If President-elect Joe Biden leaves Trump’s executive order in place, U.S. investment firms and pension funds would be required to sell their holdings in companies linked to the Chinese military by Nov. 11. And if the U.S. determines additional companies have military ties in the future, American investors will be given 60 days from that determination to divest.Since the start of the coronavirus pandemic, Trump’s administration has ramped up its attacks on China, imposing sanctions over human-rights abuses and the nation’s crackdown on Hong Kong. The U.S. also has sought to sever economic links and deny Chinese firms access to American capital.Hard-liners in the administration have warned investors for months that Chinese companies could be delisted from U.S. exchanges. As far back as August, a senior State Department official, Keith Krach, wrote a letter warning universities to divest from Chinese firms ahead of possible delistings.(Updates stock performance in the fourth 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.-traded shares of Chinese companies fell Wednesday as the New York Stock Exchange changed its mind once again on whether or not to delist a trio of China-based telecom stocks and on a report that Alibaba Group Holding Ltd. and Tencent Holdings Ltd. may be next.