China Telecom gears up for biggest share sale of 2021 after US ban

(Bloomberg) – Six months after being kicked from the New York Stock Exchange, China Telecom Corp. has received regulatory approval for a major share sale in Shanghai that is expected to be the largest in the world to date in 2021.

The plan to raise 54.4 billion yuan ($ 8.4 billion) on the mainland comes as growing tensions with the United States bring Chinese companies back to their local stock markets. China Mobile Ltd., which the NYSE delisted at the same time, is also looking to sell shares in Shanghai.

It’s already a record year for mainland share sales, with primary trades reported at 281 billion yuan, according to data compiled by Bloomberg. Stricter rules in China on overseas listings and pressure from President Xi Jinping to elevate mainland markets are adding to the momentum.

“The return of Chinese companies will be a trend given the current political tensions between the United States and China and the tightening of regulatory rules,” said Dickie Wong, executive director of research at Kingston Securities (Hong Kong) Ltd. The trend “is likely to be very strong in the short and long term, if not forever,” he said.

The China Securities Regulatory Commission did not provide details on the approval of China Telecom’s listing in a statement released on its website Thursday evening.

Hong Kong-listed shares of China Telecom rose 48% this year through Thursday’s close.

While the sale of China Telecom shares – which has yet to be priced – is likely to be the biggest this year when it takes place, it may not be for long. Syngenta Group, the Swiss seed and fertilizer company owned by China National Chemical Corp., is seeking to raise 65 billion yuan in a listing in Shanghai later in the year.

China Mobile, China Telecom, and China Unicom Hong Kong Ltd., also banned in the United States, are all listed in Hong Kong. They clashed with the NYSE in January over national security concerns following a move by then President Donald Trump to ban investments in companies linked to the Chinese military.

“High-growth companies have no choice but to register on the mainland or in Hong Kong,” said Steven Leung, executive director of UOB Kay Hian (Hong Kong) Ltd. “More Companies choosing the A-share market may mean more capital funded by Hong Kong shares, ”he added.

This possible challenge for Hong Kong stocks could add to the pressure on the Hang Seng Index, which erased gains made earlier this year. China Mobile and China Unicom are members of the city’s stock index.

(Adds the performance of China Telecom since the beginning of the year in Hong Kong in paragraph 6)

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