On New Year’s Eve, the New York Stock Exchange announced that three Chinese telecoms would be delisted from the Big Board sometime between Thursday and Monday. This was due to an executive order that President Trump could have issued at any point over the last three years and 11 or so months he’s been in office, but which he finally got around to signing four days after it became clear he wasn’t going to get another four years to dick around with it, banning Americans from investing in companies who Peter Navarro or some other such person decided was too closely tied to the Chinese military. It was, as ever with this administration, slapdash and subject to bitter internal infighting, with Mike Pompeo seeking to undergird his future presidential campaign by really sticking it to the reds on one side, and Steve Mnuchin desperately trying to stave off total financial collapse before he can get the hell out of town on the other.
This had the predictable consequence of angry grumbling about retaliation from Beijing, which we really shouldn’t worry too much about, the experts said, and even more predictable consequences for the share prices of those companies whose ADRs were in imminent danger of ceasing to be. All of this, at least, was predictable. Everything that’s happened since has been anything but, and the experts don’t know what to say now.
The New York Stock Exchange has abruptly reversed plans to delist three major Chinese telecommunications companies after consulting regulators about an investment ban ordered by President Donald Trump…. The move came as a surprise and sparked confusion among officials at the U.S. Treasury and State departments, and National Security Council….
The NYSE’s reversal was “quite unexpected,” said Jackson Wong, director of asset management at Amber Hill Capital Ltd. in Hong Kong. “Some funds that had an obligation to unload these shares will now need to buy them back. Some investors are also starting to price in a scenario that the decision to halt delistings could be the start of a de-escalation in tensions between China and the U.S….”
“They’ve had seven weeks to talk to Treasury about this,” Lundy said, adding that the department had published lengthy supplemental FAQs as well. “To implement the decision, and then four days later to backtrack -- that’s just odd.”
Oh, just you wait, Travis!
The New York Stock Exchange is reconsidering its decision to halt the delisting of three major Chinese telecommunications firms after Treasury Secretary Steven Mnuchin told the Big Board he opposed its shock announcement to grant the companies a reprieve…. The remarkable back-and-forth -- along with opaque statements from Treasury’s Office of Foreign Assets Control on how soon action was required and which securities would be affected -- has confounded U.S. brokers and asset managers, and triggered uncertainty for traders across the globe….
The NYSE’s initial decision was meant to comply with the order but the exchange changed course when it became unclear that the companies were actually banned, according to people familiar with the matter. If and when the exchange receives confirmation from the government about what’s prohibited, it will move forward with delisting, the people said.
Just two more weeks of this for the junior senator from Georgia’s stock exchange (although there may be even less time for the junior senator from Georgia), and then we can go back to antagonizing the Chinese in more usual ways.
The provision in the National Defense Authorization Act asks the Treasury secretary to conduct a report on China’s illicit finance risks, using information largely obtained from trade-based money-laundering analyses done by the U.S. Comptroller General. The Treasury has up to a year to submit the report…. The study would look into the extent and effect of illicit finance risk related to the Chinese government and Chinese companies, including financial institutions; illicit finance risks emanating from China; whether such risks have been enabled directly or indirectly by the Chinese government through weak regulatory oversight or administrative controls; and the ways increased global trade and investment from the Chinese government and Chinese companies expose the international financial system to illicit finance risks….
Such reports are a low-stakes way for lawmakers to identify a concern they have without pushing for statutory language, she noted, and federal agencies can be overwhelmed with such congressional reporting obligations.
“This is more like a name-and-shame exercise, if it does get published,” she said.
NYSE Abruptly Reverses Plan to Delist Three Chinese Telecoms [Bloomberg]
NYSE Weights Reverting to Original Plan to Delist China Shares [Bloomberg]
Defense Bill Orders Study of Illicit Finance Risks Posed by China [WSJ]