Shares in Chinas three major telecommunications companies dropped in Hong Kong on Friday, after index compilers said they would remove the stocks from their benchmarks due to a U.S. government investment ban.
The removals come after a period of uncertainty about whether the shares would be covered by the ban and flip flops by the New York Stock Exchange about whether to delist American depositary receipts issued by the three companies, China Mobile Ltd. , China Telecom Corp. and China Unicom (Hong Kong) Ltd.
Guidance from the Treasury Department this week made it clear that the publicly traded units would be covered, as well as their closely held parent companies, which the U.S. government has already named as helping the Chinese military.
Shares in the trio, which have been on a roller-coaster ride recently, fell as much as 10% to 11% in early trading, before recovering some ground. Shares of China Mobile, the largest of the three, closed 4.2% lower at 41.5 Hong Kong dollars, the equivalent of $5.35, a share, which is its lowest close in more than 14 years. China Telecom and China Unicom closed 3.5% and 0.9% lower respectively.
All three stocks traded in record volumes, with more than one billion shares of China Mobile and China Unicom changing hands, and more than 3.2 billion China Telecom shares trading during the day.