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S&P Dow Jones Indices to remove 21 Chinese companies from its global bond and equity benchmarks after the US blacklist.
S&P; Dow Jones Indices said it would remove 21 Chinese companies from its global stock and bond benchmarks after the Trump administration accused the companies of having ties to the Chinese military and prohibited US investors from trading or owning their securities. ; Global, said it would remove 10 companies, including surveillance camera maker Hangzhou Hikvision, supercomputer maker Dawning Information (also known as Sugon) and Semiconductor Manufacturing International Corporation (SMIC), from more than four dozen of its stock indices to starting December 21. The firm will also remove the securities issued by 11 other blacklisted companies from its fixed-income benchmarks effective January 1, it said in a statement Wednesday night. Get the latest insights and analysis from our Global Impact newsletter on great stories originating from China. The latest index rebuild and rebalancing will force global money managers to adjust their investment allocations as China takes steps to expand access to its domestic capital markets for foreign investors. Major index compilers have also started adding or increasing the weighting of Chinese stocks due to their growing business presence and dominance. “S&P; DJI will continue to monitor any updates to the list of named entities, further clarifications on the scope of the executive order as it pertains to affiliates and any other relevant matters, “the company said.” Any additional updates released prior to the US market close on Friday, December 11, 2020 will be evaluated by S&P; DJI and, if applicable, implemented in conjunction with the rebalancing effective date of December 21, 2020 ”. There are 2,009 Chinese companies in its S&P; Global BMI Index, one of its largest benchmark indices, with more than 12,500 constituent companies and one of the affected indices, with a combined weight of 5.1%, according to a Nov.30 company fact sheet. S&P; Dow Jones said it was only removing companies “explicitly named” in US President Donald Trump’s Nov. 12 executive order, which designated 31 companies as owned or controlled by the Chinese military, and excluded any affiliated companies. The order prohibits Americans from investing in those companies as of January 11 next year, just days before US President-elect Joe Biden takes office. Last week, the Trump administration added four other companies to the blacklist, including SMIC and China National Offshore. Oil Corporation (CNOOC), the largest oil explorer in the country. S&P; Dow Jones is the latest index provider to announce plans to remove blacklisted Chinese companies from its global benchmarks after FTSE Russell said last week that it would remove eight companies from its family of global stock indices based on December 21. initial steps to deal with more than $ 41 billion in dollar- and euro-denominated debt issued by sanctioned Chinese companies and their units in their emerging markets bond indices. It is also understood that MSCI and Nasdaq are evaluating whether to remove the designated companies from their indices, and could make an announcement in the coming days. The companies to be removed from the S&P; The Dow Jones stock indices are: CRRC Corporation, China Communications Construction Company, China National Chemical Engineering Group, China Nuclear Engineering & Construction Corporation, China Spacesat Company, China State Construction International Holdings, China Railway Construction Corporation, Sugon, Hikvision and SMIC . a combined market capitalization of $ 204.1 billion at the close of business on Wednesday, according to Bloomberg data. In addition to those companies, S&P; Dow Jones said it would remove bonds from its fixed income benchmarks issued by 11 affected companies: Aviation Industry Corporation, China Aerospace Science and Industry Corporation, China Electronics Corporation, China Electronics Technology Group, China General Nuclear Power Corporation, China National Chemical Corporation, China National Nuclear Corporation, China Shipbuilding Industry Corporation, China South Industries Group, China State Shipbuilding Corporation, and China Three Gorges Corporation. The latest removal of Chinese stocks and bonds from global benchmarks comes as Sino-U.S. Relations have hit their worst in decades on a variety of topics ranging from trade to treating the Uygur minority. in Xinjiang and the autonomy of Hong Kong. Despite that, investors continue to look for potential opportunities in China as Beijing moves to further open its financial markets to foreign investment and Chinese sovereign debt has increased. has been included in global bond indices in th In recent years, Chinese stocks held 5.16% by weight in the MSCI ACWI index, the compiler’s flagship index of 2,990 large and mid-cap global companies with a value of US $ 56 trillion combined market, behind only US and Japanese companies Nov. 30.Chinese dollar-based bonds also have more than 50% share in JPMorgan’s Asia credit index. More from South China Morning Post: * The US Senate bill to isolate Wall Street from Chinese companies may become a helping hand for Hong Kong stock exchange * China’s regulator refuting claim of Chinese accounting fraud in US markets, says its willingness to collaborate has been rejected * Chinese state oil giant CNOOC collapses as new US sanctions Tommy Hilfiger and Nike say it seeks to overturn the US sanction on its Xinjiang plant. This article S&P; Dow Jones Indices to remove 21 Chinese companies from its global equities, bond benchmarks after it was first blacklisted in the US On South China Morning Post For the latest news from the South China Morning Post, download our mobile app. Copyright 2020.
