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▲ Trump signed an executive order banning Americans from investing in companies owned or controlled by the Chinese military.
US President Trump signed an executive order banning Americans or companies from investing in companies owned or controlled by the Chinese military, including China Mobile (00941), China Telecom (00728) and Hikvision (Depth: 002415) for a total of 31 China-funded companies refer to related companies that supply products to the Chinese military or provide support in other ways. China Mobile’s share price fell 5% to close at 50 yuan, with sales of 3.19 billion yuan; China Telecom fell 7.8% to close at 2.49 yuan, with sales of nearly 600 million yuan.
Another mainland telecom operator Unicom (00762) was already on the US sanctions list in the previous round: the share price fell 6.6% to close at 4.98 yuan, or 710 million yuan.
China Telecom and China Unicom: assessment of the impact of administrative orders
China Telecom said it is examining the impact of relevant administrative orders on the group and preliminary estimates could impact the trading prices of the shares and American Depositary Securities (ADR). The company is closely monitoring the progress of the executive order (including any additional guidelines for implementation) and will publish another announcement in due course in accordance with the listing rules and applicable laws.
China Unicom also said that it is estimated that the administrative order will impact the company’s stock and ADR trading prices, and is looking into the potential consequences of the administrative order, including any further implementation details, in order to have a fuller understanding of its impact on the group. The company is also studying and evaluating suitable measures to protect the legal rights of the company and investors.
List of 31 companies (20 companies announced in June), (11 companies announced in August)
It is reported that as of January 11 next year, American corporations and individuals are prohibited from holding shares in related companies directly or through investment funds.
Trump said in an executive order that China is increasingly using US funds to provide resources for the development and modernization of military and intelligence agencies, making China a direct threat to the US military and overseas.
US government officials said these companies enable the Chinese military to acquire advanced technology and skills, help the military expand and take a more active position on a global scale.
Major investors of China Mobile and China Telecom institutions linked to the United States
It is still unclear how the US will implement the ban: if US-funded financial institutions were to get rid of China Telecom and China Telecom stock prices, this could lead to tens of billions of sales orders.
According to Bloomberg statistics, excluding China Mobile Communications Group, the parent company of China Mobile, China Mobile’s five largest holding institutions include BlackRock, Linghang, Dimensional Fund Advisors, State Street Bank and Fidelity. US-funded financial institutions, the five largest shareholders alone hold a total of 644 million shares of China Mobile. Based on China Mobile’s half-day closing price of RMB 49.45 on Friday, the holding value reached 31.8 billion yuan.
In terms of China Telecom’s H shares, four of the five largest holding institutions have a US-funded background, including Citigroup, BlackRock, BNY Mellon and Franklin, with a combined position of 4.408 billion shares, due to close on Friday. The market price is 2.45 yuan and the value is over 10.8 billion yuan, but it is worth noting that Citigroup and the Bank of New York Mellon are custodian banks, not necessarily all American investors.
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Responsible director: Liang Haosuo, Mai Deming
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