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Why China Unicom Stock Fell Today

By Chris Neiger - Jan 7, 2021 at 3:35PM

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The NYSE has changed its tune on delisting the company -- again.

What happened

Shares of China Unicom ( CHU ) plummeted after the New York Stock Exchange said in a statement late Wednesday that it would move forward with delisting the Chinese telecom company and some of its peers. The tech stock fell by as much as 13.8% Thursday and was down by 11.4% as of 3:30 p.m. EST.

So what 

For some tech investors, the latest decision by the NYSE is a frustrating one. The exchange initially planned to delist China Unicom in response to an executive order from President Trump. It then reversed that decision earlier this week and announced that China Unicom and other Chinese telecoms wouldn't be delisted. But with this latest announcement, the NYSE has reversed course once again.

Lines pointing down on a red background.

Image source: Getty Images.

The executive order Trump issued back in November prohibits Americans from buying stock in Chinese companies, on American exchanges, that the U.S. government has deemed supportive of the Chinese military. 

The order says that U.S. investors won't be able to trade the securities of China Unicom, and some other Chinese stocks, after 4 p.m. on Jan. 11.

In a statement on Monday, the NYSE said, "In light of further consultation with relevant regulatory authorities" the exchange "no longer intends to move forward with the delisting action" against China Unicom and its peers.

But the NYSE released an updated statement Wednesday, saying that the exchange "will move forward with the delisting of the issuers" based on "new specific guidance" from the Department of Treasury's Office of Foreign Assets Control. 

Investors were clearly spooked by the statement and sent China Unicom's stock downward. 

Now what 

It's highly unlikely that the NYSE will change its mind yet again, which means that American investors will probably continue selling their shares before the upcoming deadline. Investors would be smart to steer clear of China Unicom and other Chinese telecoms for now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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