China Telecom heads to $ 8.4 billion share sale in Shanghai after US ban


Updates from China Telecom Corp Ltd

China Telecom, one of China’s state-run telecommunications groups, has been cleared to raise $ 8.4 billion in Shanghai after being kicked from the New York Stock Exchange in what is believed to be the world’s largest listing. country in a decade.

The move was the latest sign of Beijing’s efforts to minimize the fallout from any financial decoupling of the world’s two largest economies.

The company was kicked from the New York Stock Exchange along with its state counterparts China Mobile and China Unicom in January for complying with an executive order signed by Donald Trump banning Americans from investing in companies with suspected ties to the Chinese army.

China Telecom, also listed in Hong Kong, received clearance from the China Securities Regulatory Commission on Thursday to sell up to 12.1 billion shares. He plans to raise 54.4 billion Rmb ($ 8.4 billion) to the main board of the Shanghai Stock Exchange.

China has cracked down on companies seeking IPOs in the United States, most recently targeting Didi, the dominant national ridesharing app, just days after its New York IPO last month. Beijing also proposed rules that would require tech companies to seek regulatory approval before registering overseas.

U.S. regulators have also threatened to deregister Chinese companies if they fail to comply with U.S. auditing standards. About 250 Chinese companies trade more than $ 2 billion in shares on the US stock markets.

“It is increasingly likely that more radiation will occur,” said Thomas Gatley, analyst at Gavekal Dragonomics. He said these companies would “inevitably” look to mainland China or Hong Kong stock markets.

Chinese companies excluded from U.S. markets were likely to raise capital in Shanghai or Shenzhen, analysts said, while those under pressure from Beijing would move to Hong Kong for IPOs or backup listings.

The approval of the sale of China Telecom shares also underscored Beijing’s determination to use its capital markets to offset any damage caused by US regulators, analysts and lawyers said.

Political interference in the Washington and Beijing markets “was accelerating the pace” of domestic listings of Chinese companies outside the United States, according to a senior lawyer at a US law firm in Hong Kong.

Andrew Sheng, former chairman of the Hong Kong financial regulator, said, “US politicians are showing that they don’t welcome foreign listings if they are seen as rivals. It’s good for all non-US markets, so the decoupling can end with America alone. “

Sheng also cited the improvement in the attractiveness of Chinese tech companies in domestic markets, thanks to an increasingly sophisticated group of investors and large pools of savings. “The potential for Chinese companies to tap domestic capital is enormous,” he said.

China Telecom was one of the first Chinese state-owned companies to be listed in the United States when it launched an initial public offering in 2002. Its planned listing in Shanghai would be the largest for mainland markets since the Bank China’s agricultural fundraiser has raised more than $ 10 billion in Shanghai. in a double listing that also mined Hong Kong for $ 12 billion in 2010, according to Dealogic data.

But Gatley warned that China’s ability to absorb a flood of large returnee listings was limited, adding that regulators may be forced to slow the pace of onshore IPOs, with Beijing prioritizing urgent US re-listings. .

Hong Kong-listed shares of China Telecom fell 3.1% on Friday.

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