US Delisting Chinese Telecom Stocks | Major Risks Ahead | What You Need to Know

TL;DR

Chinese Telecom stocks delisted from NYSE due to military affiliation, causing implications for future investments.

Transcript

Happy new year everyone! This  is Victor here. Welcome to the   Intelligent Investor Channel where you will  learn about stock investing and personal finance   that will help you become a great investor. In today’s video, I’m going to talk   the 3 Chinese Telecom stocks, “China Mobile (CHL),  China Telecom Corp (CHA), China Unicom (CHU)”,   that wi... Read More

Key Insights

• 🎖️ Delisting of Chinese Telecom stocks due to military affiliation impacts future stock investments.
• 🔬 Political risks and compliance with auditing regulations are critical considerations for investing in Chinese stocks.
• 🙃 Chinese state-owned enterprises may face delisting risks on US stock exchanges.
• 🥶 Regulators may reach compromises to co-audit Chinese companies to avoid extensive delistings.
• 🙃 Balancing investment portfolios by focusing on US stocks and minimizing exposure to Chinese state-owned companies is advised.
• 🇭🇰 Conversion or swapping of US ADR shares with Hong Kong shares for Chinese companies listed on both exchanges may be a potential solution.
• ❓ The economic impact of widespread delistings of Chinese companies on US investors could be substantial.

Questions & Answers

Q: Why are Chinese Telecom stocks being delisted from the NYSE?

Chinese Telecom stocks are being delisted due to an executive order banning US investors from companies affiliated with the Chinese military, impacting their future trading on US stock exchanges.

Q: How many Chinese state-owned enterprises are currently listed on major US stock exchanges?

As of October 2, 2020, there were 13 national-level Chinese state-owned enterprises listed on US stock exchanges, including China Mobile, China Telecom, and China Unicom.

Q: What are the major risks for Chinese companies listed on US stock exchanges?

The major risks include potential delisting if they are unable to be audited by the PCAOB within three years, as mandated by the Holding Foreign Companies Accountable Act, affecting their trading on US exchanges.

Q: What is the strategy for investing in Chinese stocks going forward?

The strategy includes limiting exposure to Chinese stocks to less than 10% of the portfolio, focusing on the best Chinese companies, while predominantly investing in US stocks to mitigate risks.

Summary & Key Takeaways

• Chinese Telecom stocks, China Mobile, China Telecom Corp, and China Unicom, will be delisted from the NYSE by January 11, 2021.

• This delisting is a result of an executive order banning US investors from companies affiliated with the Chinese military.

• Investors in Chinese stocks must consider political risks and potential delisting when making investment decisions.