Morgan Stanley’s headquarters building in New York.
Three major U.S. investment banks will take down about 500 structured products listed in Hong Kong, according to a filing by the Hong Kong Stock Exchange on Sunday (Jan. 10).
Goldman Sachs, JPMorgan Chase and Morgan Stanley said the action is to comply with U.S. President Donald Trump‘s Executive Order 13959.
Trump issued the order on Nov. 12 last year, citing U.S. national security concerns and prohibiting Americans from investing in Chinese companies designated by the Pentagon as having ties to the Communist Party’s military.
A total of 35 Chinese companies have been blacklisted, including three Chinese telecommunications companies, including China Mobile, China Telecom and China Unicom, as well as surveillance equipment maker Hikvision, semiconductor chipmaker SMIC and railroad vehicle maker China CNR (CRRC).
The ban takes effect Jan. 11, when U.S. investors, including pension funds, will be barred from investing in Chinese companies on the Communist Party’s blacklist of military companies and will be required to withdraw their relevant investments by Nov. 11.
In a statement Sunday, the Hong Kong Stock Exchange said the delisting plan would not have a “material adverse impact” on the structured products market.
The statement said, “HKEx is working closely with the relevant issuers to ensure an orderly delisting and to arrange buyback programs for issuers.”
The New York Stock Exchange announced on Jan. 7 that it would delist three Chinese telecom companies starting Jan. 11. But prior to that, Min Sheng (MSCI Inc.), FTSE Russell, S&P Dow Jones and Nasdaq, had all announced the removal of some Chinese companies from their indexes to comply with the executive order.
When asked about the Trump executive order at a regular press conference last Nov. 13, Chinese Communist Party Foreign Ministry spokesman Wang Wenbin accused the U.S. government of abusing its power to suppress Chinese companies.
Wang also accused the U.S. government of “maliciously discrediting” China’s civil-military integration strategy.
The “civil-military integration strategy” is a way for the Chinese Communist Party authorities to advance their technological innovations. The integration is overseen by the Central Military-Civilian Integration Development Committee, a body established in 2017.
The Trump administration has repeatedly warned that the CCP is improperly using the civil-military integration strategy.
“Through the national strategy of civil-military integration, China [the CCP] has increased the size of the country’s military-industrial complex by forcing Chinese civilian companies to support military intelligence activities.” The White House noted when it issued the executive order last Nov. 12.
The White House added: “While these companies remain ostensibly private and civilian, they directly support the CCP’s military, intelligence and national security agencies and help them develop modernization.”
“The CCP is pursuing this strategy to achieve military dominance not only through its own research and development efforts, but also through the acquisition and transfer of cutting-edge world technologies, including through theft.” The U.S. State Department website states.
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