Banks Suspend Derivative Products Linked to China Telecom Stocks

The big three investment banks said they will buy back the products from investors until January 22.
Shirley TianJan 11,2021,22:12

Following U.S. sanctions on the three state-owned big China telecom stocks, Goldman Sachs, Morgan Stanley and JPMorgan filed with Hong Kong Stock Exchange Sunday saying that 484 warrants and callable bull/bear contracts related to these three stocks in Hong Kong will be suspended from trading as of Jan. 25.

The three investment banks said in the filing late Sunday that they will buy back the products from investors until January 22.

“The delistings are unlikely to disrupt markets as they represent only about 4 percent of more than 12,000 derivative products listed in Hong Kong,” according to South China Morning Post.

“HKEX is working closely with the relevant issuers to ensure orderly delisting, and facilitate buyback arrangements being arranged by the issuers,” the HKEX said in a statement announced shortly after banks’ filing.

After weeks of vacillating, the New York Stock Exchange last Thursday announced that it has scheduled the suspension for today of U.S.-traded shares of China Telecom Corp. Ltd. (NYSE: CHA; HKEX: 0728), China Mobile Ltd (NYSE: CHL; HKEX: 0941) and China Unicom Hong Kong Ltd. (NYSE: CHU; HKEX: 0762) from the Big Board comply with President Trump’s executive order.

The stock exchange first announced the plan last week, then reversed its decision on Monday. However, after Treasury Secretary Steven Mnuchin phoned the NYSE saying he disagrees with the reprieve, the delisting was back on.

The delisting follows the order Trump signed in November that bans U.S. investment in companies it alleged are owned or controlled by Chinese military. Earlier, China condemned the move and followed with threats of its own, saying on Saturday that countermeasures will follow, though did not specify what form those measures will take.