Hang Seng Index falls after NYSE moves to delist Chinese telecoms firms and US officials weigh Alibaba, Tencent ban

Martin Choi
·4-min read

Hong Kong markets dropped amid rising US-China tensions after the New York Stock Exchange reversed course again to delist three Chinese telecoms giants and a media report said that US officials were also considering banning investments in Alibaba and Tencent.

The Hang Seng Index fell 0.5 per cent to 27,548.52, ending three consecutive days of advances. The Shanghai Composite gained 0.7 per cent for its fourth straight day of gains.

The New York Stock Exchange on Wednesday said it was moving forward to delist three Chinese telecommunications carriers again less than two days after it halted that plan.

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The decision was 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. “The issuers have a right to a review of this determination.”

The mobile phone carriers led losses among blue chips on the benchmark Hang Seng Index. China Unicom dived 11.4 per cent to HK$4.45, its biggest fall in more than two months. China Mobile plunged 7.2 per cent to HK$43.30, while China Telecom tumbled 9.4 per cent to HK$2.03. The sell-off wiped off a combined HK$88.96 billion (US$11.47 billion) of their market value.

US officials were also considering prohibiting Americans from investing in Alibaba Group Holding and Tencent Holdings, The Wall Street Journal reported on Wednesday, citing people familiar with the matter.

On Tuesday, US President Donald Trump signed an executive order banning transactions with eight Chinese software applications, including Ant Group’s Alipay as well as Tencent’s WeChat Pay and QQ, citing national security concerns that the programs could provide Americans’ personal data to the Chinese government.

Alibaba, which owns this newspaper and has a stake in Ant Group, fell 3.9 per cent to HK$221, while Tencent dropped 4.7 per cent to HK$568.50.

Democrat Jon Ossoff defeated Republican David Perdue in the remaining Georgia Senate race – clinching control of the chamber for his party after fellow Democrat Raphael Warnock triumphed in the state’s other run-off election.

Senate control would smooth the way for US stimulus spending and ease President-elect Joe Biden’s legislative agenda.

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“There’s a growing sense of relief among investors that the final election hurdle has crossed,” said Stephen Innes, chief global market strategist at Axi. “Even though we are bearing witness to the markets’ keen knack of ironing itself out quickly, the most important question now is the sequencing of the Biden policy plan.”

The Democrat’s win should buoy US and Asian equity markets with the promise of further fiscal stimulus, said David Chao, global market strategist for Asia-Pacific at Invesco.

“A Democrat sweep – which means additional fiscal stimulus – is good for Asia’s economies and markets. The APAC region’s export-oriented economies are the most exposed to cyclical factors and will gain relative to global peers,” said Chao.

The logos of Tencent’s WeChat Pay and Alibaba affiliate Ant Group’s Alipay. US officials are considering a ban on investments in Tencent and Alibaba. Photo: Bloomberg
The logos of Tencent’s WeChat Pay and Alibaba affiliate Ant Group’s Alipay. US officials are considering a ban on investments in Tencent and Alibaba. Photo: Bloomberg

Markets in the Asia-Pacific gained. Japan’s Nikkei 225 rose 1.6 per cent, while South Korea’s Kospi gained 2.1 per cent. Australia’s S&P/ASX200 added 1.6 per cent.

Three companies debuted on the mainland exchanges.

In Shenzhen, automobile systems manufacturer Jiangsu Bojun Industrial Technology rose 189.5 per cent to 31.15 yuan from its listing price of 10.76 yuan, while Nantong JiangTian Chemical, which manufactures chemical products, gained 207.9 per cent to 41.23 yuan from its IPO price of 13.39 yuan.

In Shanghai, APT Medical, which develops interventional medical devices, surged 245.2 per cent to 257.02 yuan from its IPO price of 74.46 yuan.

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