What to do with China Mobile stock in my Vanguard accounts

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Topic Author
maywoo
Posts: 3
Joined: Mon Jan 11, 2021 4:33 pm

What to do with China Mobile stock in my Vanguard accounts

Post by maywoo »

On Jan 7th, I got an email from Vanguard informing me of the executive order around shares of China Mobile in my account (around $10k worth), so I tried to sell the shares before the Jan 11th deadline (which is when they would officially be delisted on the NYSE). I hadn’t been following the news about the executive order so that was the first I’d heard of the ban unfortunately. Long story short, Vanguard would not process my sell order despite the fact that I placed it immediately after getting the email and 4 days before the deadline, so now I don’t know what to do. It seems incredibly unfair. I’ve called Vanguard and the person I spoke to said they couldn’t find a buyer for the shares. This seems strange to me since the stock is only banned in the U.S. and not globally. I’d be grateful for any advice on what to do. Some of the stock was in my retirement account and some was in a brokerage account. Thanks so much!
TravelGeek
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Joined: Sat Oct 25, 2014 3:23 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by TravelGeek »

Interesting and scary and frustrating situation.

I came across this article where the comments might be of some help. Seems there are others in your situation if you read the thread.

https://seekingalpha.com/article/439717 ... ina-mobile
vsquid
Posts: 121
Joined: Sat May 18, 2019 2:24 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by vsquid »

maywoo wrote: Mon Jan 18, 2021 11:35 pm I’ve called Vanguard and the person I spoke to said they couldn’t find a buyer for the shares. This seems strange to me since the stock is only banned in the U.S. and not globally.
China mobile has an active market in Hong Kong. However the issue is that US-registered shares can't be directly bought and sold in HK. The shares would need to be "transferred" to Hong Kong for you to be able to sell these. Not sure if Vanguard or any other broker currently supports this.

If I were you, I would complain to China Mobile's Investor Relations and tell them to figure it out. They have contact info listed here including a direct email to BNY Mellon who are responsible for ADRs.
talzara
Posts: 1956
Joined: Thu Feb 12, 2009 7:40 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

maywoo wrote: Mon Jan 18, 2021 11:35 pm On Jan 7th, I got an email from Vanguard informing me of the executive order around shares of China Mobile in my account (around $10k worth), so I tried to sell the shares before the Jan 11th deadline (which is when they would officially be delisted on the NYSE). I hadn’t been following the news about the executive order so that was the first I’d heard of the ban unfortunately. Long story short, Vanguard would not process my sell order despite the fact that I placed it immediately after getting the email and 4 days before the deadline, so now I don’t know what to do. It seems incredibly unfair. I’ve called Vanguard and the person I spoke to said they couldn’t find a buyer for the shares. This seems strange to me since the stock is only banned in the U.S. and not globally.
Did you enter an after-hours limit order?

If a stock delisted on Monday, January 11, 2021, then the last day to trade was Friday, January 8, 2021. The stock probably fell during after-hours trading, so a limit order might not have executed on January 7. Vanguard trades are day trades by default, so an after-hour order on January 7 would no longer exist on January 8.

If you had entered a market order during market hours on January 8, the trade would've executed. There was plenty of liquidity on January 8. In fact, the stock price went up on its last day of trading!
maywoo wrote: Mon Jan 18, 2021 11:35 pm I’d be grateful for any advice on what to do.
If you're not an experienced stock trader, then the simplest course of action is to do nothing.

Delisting the Chinese stocks 9 days before leaving office was Donald Trump's Parthian shot. Joe Biden will be President of the United States tomorrow. We don't know what will happen with these stocks. They may relist on the NYSE, or they may not.

If an ADR gets cancelled, the sponsor will give you a choice between taking delivery of the underlying shares or cash.

You can see a list of terminated ADRs on BNY Mellon's corporate actions page. Four Chinese companies have terminated their ADRs, but China Mobile isn't one of them. It appears that China Mobile is also taking a wait-and-see approach.
Jan 14, 2021
168926103 CHINA COMMUNICATIONS CONSTRUCTION CO LTD - TERMINATION NOTICE
16944S103 CHINA RAILWAY GROUP LTD - TERMINATION NOTICE
16947L105 CHINA RAILWAY CONSTRUCTION CORPORATION LIMITED - TERMINATION NOTICE
16948H103 CHINA STATE CONSTRUCTION INTERNATIONAL HOLDINGS LIMITED - TERMINATION NOTICE

https://www.adrbnymellon.com/directory/ ... te-actions
Here is how Vanguard Brokerage Services handles corporate actions:
  • Mandatory corporate actions are applied to your investment automatically.
  • Voluntary corporate actions require you to respond to the company's offer.
  • We'll contact you about voluntary corporate actions for securities you own in your Vanguard Brokerage Account.

    https://investor.vanguard.com/investing ... te-actions
Topic Author
maywoo
Posts: 3
Joined: Mon Jan 11, 2021 4:33 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by maywoo »

Thanks for the advice everyone! Regarding whether I entered an after hours limit order - I didn't enter a limit order because I knew I didn't have much time to sell, but TBH, I don't remember what time I entered the order on Jan 7th. I do remember however, that I tried to sell again on Jan 8th when I discovered that the initial order didn't go through and it continued to not go through, so that was when I called Vanguard (which was during business hours on Jan 8th).

I bought CHL a long time ago for it's dividend and when the relationship between the U.S. and China was not so tense :( I don't high hopes that the ban will be reversed unfortunately even with a new administration...which brings me to my second question - Can I claim a loss on my taxes given that I can't do anything with the stock and Vanguard hasn't been responsive (which effectively makes it a loss)?

Thanks again! You all have been super helpful :)
talzara
Posts: 1956
Joined: Thu Feb 12, 2009 7:40 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

maywoo wrote: Wed Jan 20, 2021 1:42 pm I do remember however, that I tried to sell again on Jan 8th when I discovered that the initial order didn't go through and it continued to not go through, so that was when I called Vanguard (which was during business hours on Jan 8th).
7.6 million shares of China Mobile ADRs were traded January 8, 2021, which is higher than the average daily volume for this stock. There was plenty of liquidity on the last day of trading.
maywoo wrote: Wed Jan 20, 2021 1:42 pm Can I claim a loss on my taxes given that I can't do anything with the stock and Vanguard hasn't been responsive (which effectively makes it a loss)?
No. You haven't lost anything yet.

The ADR hasn't terminated yet. If it terminates, then you will be given the choice between underlying shares or cash.

I gave you a link to the BNY Melon corporate actions page: https://www.adrbnymellon.com/directory/ ... te-actions Here's what it says about one of the other Chinese ADRs, which is being terminated:
As owners and beneficial owners of the above ADRs, you are hereby notified that The Bank of New York Mellon, as depositary (the “Depositary”), will terminate the ADR facility and will no longer be a Depositary for the unsponsored ADR program of China Communications Construction Co LTD (“China Communications Construction”), as of 5:00 PM (Eastern Time) on Friday, February 12, 2021.

Holders of China Communications Construction ADRs have until Monday, August 16, 2021 to surrender your China Communications Construction ADRs for delivery of the underlying shares. ... Subsequent to Monday, August 16, 2021 the Depositary may attempt to sell the underlying shares.

https://www.adrbnymellon.com/files/ad914197.pdf
The announcement was made on January 14, 2021, but the ADR doesn't terminate until February 12, 2021. BNY Mellon won't start to sell the underlying shares until after August 16, 2021. That's at least 7 months from announcement to cash-out.

You own a different ADR that hasn't even announced its termination yet. If Vanguard won't trade it in for underlying shares, it'll be months before you get cashed out.

If a bond matures in 8 months but doesn't have a secondary market, it's still worth something. The bond doesn't become worthless just because it can't be traded.
adogandzic
Posts: 9
Joined: Sun Apr 08, 2018 10:03 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by adogandzic »

What will happen with the dividends in this case? On my Vanguard account, the selection is "reinvest" and I cannot change it.
I am pretty sure they cannot be reinvested. But will the dividends be distributed at all?
talzara
Posts: 1956
Joined: Thu Feb 12, 2009 7:40 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

adogandzic wrote: Thu Mar 04, 2021 10:07 am What will happen with the dividends in this case? On my Vanguard account, the selection is "reinvest" and I cannot change it.
I am pretty sure they cannot be reinvested. But will the dividends be distributed at all?
The executive order banned Americans from buying certain Chinese ADRs. It did not ban Americans from owning them until November 2021. As long as you own the ADRs, you still get the dividends. Vanguard will put the money in your settlement fund, just like it would do for any other delisted stock that pays dividends.
Topic Author
maywoo
Posts: 3
Joined: Mon Jan 11, 2021 4:33 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by maywoo »

Hi there,

Has anyone had any luck unloading shares of China Mobile in their Vanguard account? I am still not sure how to do this and Vanguard has been no help while yet another deadline to exchange them is looming.

Thanks!
UpperNwGuy
Posts: 6322
Joined: Sun Oct 08, 2017 7:16 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by UpperNwGuy »

adogandzic wrote: Fri May 07, 2021 12:57 pm Here is the latest:

https://www.wsj.com/articles/nyse-to-de ... 1620394719
For those of us who can't read the article because it's behind a paywall, can you summarize it?
adogandzic
Posts: 9
Joined: Sun Apr 08, 2018 10:03 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by adogandzic »

Here is another link which should be accessible. It is the same article.

https://www.bangkokpost.com/business/21 ... ng-appeals

I guess here is the key part: Some smaller U.S. investors who held ADRs in the Chinese companies and didn't sell them before Mr. Trump's order took effect in January have found themselves stuck with securities they can't trade. Such investors haven't been able to swap their ADRs for Hong Kong shares because their brokerages don't support international brokerage accounts.

The issue came up at a hearing of the House Financial Services Committee on Thursday when Rep. Van Taylor (R., Texas) asked the new head of the SEC how he planned to help such investors. "Investors are having their capital stuck in investments…. How are we going to get them out?" Mr. Taylor asked.

SEC Chairman Gary Gensler, who took the helm of the agency last month, said he hadn't been briefed on the issue but pledged to look into it.
katnrica
Posts: 61
Joined: Sat Apr 23, 2011 11:28 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by katnrica »

well, the dividend payment finally showed up in our Vanguard account this week (on June 1) - about $1.13 per US ADR.
We expect there will be another dividend payment in late August , albeit a slightly smaller amount, going by prior years divvy payment history.

As for what to do with the stock before the Nov 2021 deadline - I expect that the folks at BNY Mellon will have some recommendations for US investors who hold CHL (and other de-listed Chinese telecom securities) a few months before the deadline. I wrote to our Senator's office asking for help but haven't heard back - I'll ping them again in a couple weeks. I expect the SEC will step in and find a way to let US ADR holders exchange their shares for cash before the Nov deadline; else they will (hopefully) extend the deadline.
Rich Mountain
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Joined: Fri May 08, 2020 8:03 am

Re: What to do with China Mobile stock in my Vanguard accounts

Post by Rich Mountain »

Can anyone "translate" this BNY Mellon doc into plain and simple language? What exactly are the options to sell or cash out CHL shares held in a VG brokerage account?
talzara
Posts: 1956
Joined: Thu Feb 12, 2009 7:40 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

Rich Mountain wrote: Wed Jun 30, 2021 10:45 am Can anyone "translate" this BNY Mellon doc into plain and simple language? What exactly are the options to sell or cash out CHL shares held in a VG brokerage account?
An ADR termination is a corporate action, just like a merger. You are being given the choice between taking delivery of the underlying shares, or having the depository bank sell the shares for cash after the ADR terminates on September 13, 2021.

If you make no election, you will receive cash.
Rich Mountain
Posts: 15
Joined: Fri May 08, 2020 8:03 am

Re: What to do with China Mobile stock in my Vanguard accounts

Post by Rich Mountain »

talzara wrote: Wed Jun 30, 2021 1:39 pm
Rich Mountain wrote: Wed Jun 30, 2021 10:45 am Can anyone "translate" this BNY Mellon doc into plain and simple language? What exactly are the options to sell or cash out CHL shares held in a VG brokerage account?
An ADR termination is a corporate action, just like a merger. You are being given the choice between taking delivery of the underlying shares, or having the depository bank sell the shares for cash after the ADR terminates on September 13, 2021.

If you make no election, you will receive cash.
Thanks much. So do nothing, and BNY Mellon sells my ADR shares, and routes the proceeds (minus fees?) to my VG brokerage account? And the cash value per share will be determined how exactly?
talzara
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Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

Rich Mountain wrote: Wed Jun 30, 2021 5:53 pm Thanks much. So do nothing, and BNY Mellon sells my ADR shares, and routes the proceeds (minus fees?) to my VG brokerage account? And the cash value per share will be determined how exactly?
BNY Mellon will sell the underlying shares. You will still own the ADSes. When the sale has been completed, BNY Mellon will send out another notice with the cash value of each ADS. Vanguard can then turn in your ADSes for cash.

The cash value is the amount that BNY Mellon sells the shares for, minus fees as described in the notice.
gougou
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Re: What to do with China Mobile stock in my Vanguard accounts

Post by gougou »

adogandzic wrote: Wed Jun 30, 2021 9:44 am BNY notice:

https://www.adrbnymellon.com/files/al948081.pdf
That's very interesting. Expect a huge dump on HK.941 (China Mobile's Hong Kong listing)
talzara
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Joined: Thu Feb 12, 2009 7:40 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

gougou wrote: Thu Jul 01, 2021 12:19 pm That's very interesting. Expect a huge dump on HK.941 (China Mobile's Hong Kong listing)
As of March 31, 2021, the remaining ADRs represented only 85.3 million underlying shares.

There is enough liquidity to absorb 85.3 million shares. The stock price only fell 4.2% on January 8, 2021, when 1.1 billion shares were traded. (The Hang Seng went up 1.2% on January 8, so it's actually a drop of 5.4% relative to the index.)
gougou
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Re: What to do with China Mobile stock in my Vanguard accounts

Post by gougou »

talzara wrote: Thu Jul 01, 2021 1:49 pm
gougou wrote: Thu Jul 01, 2021 12:19 pm That's very interesting. Expect a huge dump on HK.941 (China Mobile's Hong Kong listing)
As of March 31, 2021, the remaining ADRs represented only 85.3 million underlying shares.

There is enough liquidity to absorb 85.3 million shares. The stock price only fell 4.2% on January 8, 2021, when 1.1 billion shares were traded. (The Hang Seng went up 1.2% on January 8, so it's actually a drop of 5.4% relative to the index.)
Yeah but Jan 8, 2021 is probably not a normal day. I see daily trading volumes mostly in the 20M to 30M range. 85M shares can at least make a small dent on that.

I'm very attracted by the dividend yield and low valuation on Chinese blue chips such as CNOOC (which also got delisted) so I'm actively monitoring the situation and thinking about buying more.
talzara
Posts: 1956
Joined: Thu Feb 12, 2009 7:40 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

gougou wrote: Thu Jul 01, 2021 2:35 pm Yeah but Jan 8, 2021 is probably not a normal day. I see daily trading volumes mostly in the 20M to 30M range. 85M shares can at least make a small dent on that.

I'm very attracted by the dividend yield and low valuation on Chinese blue chips such as CNOOC (which also got delisted) so I'm actively monitoring the situation and thinking about buying more.
September 14, 2021 won't be a normal day, either. Institutional investors know that BNY Mellon has 85 million shares to unload, and they'll be ready to make a block trade.

Also, BNY Mellon may sell shares at its discretion on any day after September 13, 2021. It does not have to make the entire trade on one day.

85 million shares over multiple days is not much of a market disruption compared to 1.1 billion shares on one day.
adogandzic
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Re: What to do with China Mobile stock in my Vanguard accounts

Post by adogandzic »

Vanguard just sent me a "You're eligible to participate in this corporate action" regarding China Mobile. They say I can call them if I wish to sell the ADR. Or I can wait after Sept 13 and have BNY attempt to sell.

Anyway, as far as I see on Vanguard's site, their ADR price is about 3% lower than what is on hk exchange. But apparently they can trade it...
Rich Mountain
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Joined: Fri May 08, 2020 8:03 am

Re: What to do with China Mobile stock in my Vanguard accounts

Post by Rich Mountain »

adogandzic wrote: Thu Jul 15, 2021 12:13 am Vanguard just sent me a "You're eligible to participate in this corporate action" regarding China Mobile. They say I can call them if I wish to sell the ADR. Or I can wait after Sept 13 and have BNY attempt to sell.

Anyway, as far as I see on Vanguard's site, their ADR price is about 3% lower than what is on hk exchange. But apparently they can trade it...
Yes. I received that email, too. VG must have been pressured to re-open trading. They partnered with another entity to sell CHL ADRs held by clients in VG accounts. Sold my CHL position today via phone. No commission. But a market order only. Sale price was $29.46. Confirmation came thru in 20 minutes.
medusa98
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Joined: Thu Jul 15, 2021 10:15 am

Re: What to do with China Mobile stock in my Vanguard accounts

Post by medusa98 »

Just realized I have 200 China Mobile Ltd. shares in my Schwab account.
No option to trade them. Messaged Schwab to see what I can do.

Am somehow still receiving dividends. Last dividend was received June 7, 2021.

Anyone understand this gibberish?
CHINA MOBILE LTD FSPONSORED ADR 1 ADR REPS 5 ORD SHS
talzara
Posts: 1956
Joined: Thu Feb 12, 2009 7:40 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by talzara »

medusa98 wrote: Fri Aug 06, 2021 10:18 am Just realized I have 200 China Mobile Ltd. shares in my Schwab account.
No option to trade them. Messaged Schwab to see what I can do.

Am somehow still receiving dividends. Last dividend was received June 7, 2021.

Anyone understand this gibberish?
CHINA MOBILE LTD FSPONSORED ADR 1 ADR REPS 5 ORD SHS
China Mobile is a sponsored ADR. Each ADR represents 5 ordinary shares.

You don't have to do anything. If you do nothing, your shares will be automatically cashed out sometime after September 14, 2021.
tj888
Posts: 1
Joined: Wed Oct 13, 2021 11:39 am

Re: What to do with China Mobile stock in my Vanguard accounts

Post by tj888 »

Does taking the "Do nothing" approach apply to share holders with TDAmeritrade? So far I have heard nothing about my CHL shares.
adogandzic
Posts: 9
Joined: Sun Apr 08, 2018 10:03 pm

Re: What to do with China Mobile stock in my Vanguard accounts

Post by adogandzic »

adogandzic wrote: Wed Jun 30, 2021 9:44 am BNY notice:

https://www.adrbnymellon.com/files/al948081.pdf
Another BNY notice:

https://www.adrbnymellon.com/files/ad968630.pdf

Effective November 03, 2021, China Mobile Limited registered ADR
holders will be required on a mandatory basis to surrender their ADRs
to BNY Mellon for cancellation and exchange. Holders of ADSs in the
Direct Registration System or in brokerage accounts will have their
ADSs automatically exchanged for the cash proceeds.
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