Wall Street Banks To Delist Derivative Products Linked To China Telecom, China Mobile And China Unicom In Hong Kong To Comply With US Sanctions
Goldman Sachs, Morgan Stanley and JPMorgan said they would delist 484 warrants and other derivative products linked to China Telecom, China Mobile and China Unicom stocks in Hong Kong later this month to comply with US sanctions on the three mainland telecom companies.
The Wall Street banks will buy back the products from investors until January 22, according to stock exchange filings on Sunday.
The delistings are unlikely to disrupt markets as they represent only about 4 per cent of more than 12,000 derivative products listed in Hong Kong.
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The Wall Street banks are following the New York Stock Exchange that said it would delist the US-traded shares of the three firms from Monday to comply with an executive order signed by outgoing President Donald Trump. The order bans American investors from owning or trading in the stocks of companies said by the US government to be owned or controlled by the Chinese military.
Hong Kong Exchanges and Clearing (HKEX) does not believe the delisting of the 484 warrants will have a material adverse impact on Hong Kong’s structured products market, the largest in the world with over 12,000 listed products.
“HKEX is working closely with the relevant issuers to ensure orderly delisting, and facilitate buyback arrangements being arranged by the issuers,” the HKEX said in a statement issued on Sunday night adding it was confident that there will be sufficient investment choices to meet market demand.
Brokers should advise clients of risks if warrants issuers execute early redemption, said Gordon Tsui, chairman of Hong Kong Securities Association.
“Since only a few percentages of warrants in Hong Kong will be affected, I don’t think there should be significant selling pressure on Monday,” Tsui said.
In December, the average daily turnover of structured products in Hong Kong stood at HK$13.8 billion (US$1.78 billion).
The Securities and Futures Commission (SFC) reminded the investment banks to carefully assess the impact of the US sanctions on their products, according to a spokesman of the SFC in a response to the Post on Sunday.
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