Markets welcome NYSE’s decision to reverse delisting Chinese telecoms firms

US investment banks and the NYSE have successfully lobbied for a change to the Trump administration’s ban, analysts say

The New York Stock Exchange has reversed its decision to delist three Chinese companies. Bloomberg

The New York Stock Exchange’s decision on Monday to reverse plans to delist China’s three biggest state-owned telecommunications companies is a sign that the Trump administration's unilateral approach to the world’s second-biggest economy may be changing, market experts said.

“The reversal of the delisting of Chinese firms is a surprise and it appears that the large US investment banks and the NYSE have successfully lobbied to protect their interests,” said Hasnain Malik, an emerging and frontier markets analyst at Tellimer Research.

NYSE’s about turn on the delistings came just four days after the exchange said it would remove shares of China Mobile, China Telecom Corporation and China Unicom Hong Kong to comply with an executive order. In November, US President Donald Trump issued an order barring American investments in Chinese firms it deemed to be owned or controlled by the country's military.

The reversal of the delisting of Chinese firms is a surprise and it appears that the large US investment banks and the NYSE have successfully lobbied to protect their interests

NYSE cited “consultation with relevant regulatory authorities” for backtracking on the delisting plan.

Tensions between the world's two largest economies have grown consistently during the Trump presidency and have led to the NYSE announcement of the delisting of Chinese firms, an unprecedented move by a US exchange.

“This is good news and only a starter for markets about Biden’s upcoming presidency,” said Naeem Aslam, chief market analyst, Avatrade. “It shows that under Biden’s presidency, things are likely to return to normal, and perhaps we will see relations normalising between the two biggest economies of the world. Traders are likely to see this as an encouraging sign.”

However, several points of friction remain between the US and China such as trade tariffs, currency, 5G and semiconductor technologies, TikTok and WeChat, and restrictions on US government funds investing in Chinese assets.

Although President-elect Biden is likely to maintain pressure on China, he “will seek a multilateral approach compared to Trump’s unilateralism”, said Mr Malik.

“For investors, China offers one of the strongest macroeconomic recovery stories globally in developed or emerging markets. Its equities include some of the largest, high-growth technology plays, and its debt and equities are growing as a share of commonly followed investment benchmark indices. So, they may well continue to ignore US-China friction,” added Mr Malik.

Chinese companies have turned to the US stock market for capital and international prestige for more than two decades, raising at least $144 billion from some of the world’s largest investors.

“The NYSE is trying to disavow any listing policy being attached to political reasons rather than fraudulent means or legitimate security concerns,” said Stephen Innes, chief global market strategist at Axi.

“We can’t have a politician in a democracy dictating the market policy rules for political concerns rather than to protect domestic investors. I think the NYSE wants to buy more time to see how the Biden administration will deal with the issues rather than blacklisting firms only to whitelist them later.”