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Image source,fake images
The New York Stock Exchange in the United States announced that it will initiate a procedure to delist the three local Chinese state telecommunications companies that are listed on the local market in accordance with an executive order signed by President Trump in November. All three companies are accused of having ties to the Chinese military.
A statement issued by the New York Stock Exchange on Thursday (December 31) stated that China Telecom, China Mobile, and China Unicom Hong Kong will be ordered to delist on January 11 unless the company requests a review.
The executive order signed by Trump stipulates that US investment companies, pension funds and other types of investors will not be able to buy shares of 31 Chinese companies. These 31 companies were designated by the United States Department of Defense as companies supported by the Chinese military earlier this year.
Affected by deteriorating US-China relations and reports that several US-listed Chinese companies were exposed to exaggerated operational data last year, the US government has taken repeated action against Chinese companies listed locally in recent months. The outside world believes that as the American authorities continue to block these companies, more Chinese companies will leave the United States and go public in Hong Kong and elsewhere.
Image source,fake images
Ruixing Coffee reported on a fraud scandal in the US capital market. Before the US elections, China’s concept stocks met stiff resistance in the United States and were once seen as a prelude to the decoupling of Sino-US finances.
In addition to the New York Stock Exchange, China Telecom, China Mobile and China Unicom Hong Kong are listed on the Hong Kong Stock Exchange. The statement from the New York Stock Exchange did not specify the relationship between the three companies and the Chinese military.
Trump’s executive order at the time noted that China “is increasingly using American capital to fund its armed forces, intelligence agencies, and other security agencies, and to promote the development and modernization of these departments.”
White House officials said they have been considering the new executive order for several months. The 31 affected companies were designated by the United States as companies backed by the Chinese military earlier this year. The industries involved range from tech companies to large state-owned construction companies.
In recent months, the US government has taken various actions against the Chinese companies listed there, but there are many business considerations.
Several Chinese companies were exposed last year to overstate their operating data, including the coffee chain Luckin Coffee. Later, the company admitted that its CFO Liu Jian and his subordinates were suspected of falsifying false reports during the second quarter to the fourth quarter of 2019. The preliminary estimate implied a sales fraud worth 2.2 billion RMB.
Chinese online streaming company iQiyi was accused by short sellers Wolfpack and Muddy Waters of inflating user numbers, revenue and acquisition consideration. He estimated that he had falsely reported 8 to 13 billion yuan in revenue, and his share price fell 13% at one point.
Subsequently, the US Congress passed the Foreign Company Liability Act, which requires foreign companies listed on US exchanges to comply with US auditing standards. Accounting Supervision of Public Companies will prohibit these foreign companies from listing on any stock exchange in the United States.
Once the bill enters into force, it will have an impact on more than 100 companies funded by China, many of which have already started the process of returning to Hong Kong to be listed on a secondary listing to avoid negative impact from the new bill in companies.
