Morgan Stanley Capital International (MSCI), the world’s leading stock index provider, said it will remove five Chinese companies from its flagship global equity index as of Jan. 27, amid a pending update to the Trump administration’s order banning Americans from investing in certain Chinese companies.
The five companies – China GNIC, China Chemical, China Nuclear Power, China Shipbuilding Industry and Wave International – will be removed from the MSCI Country Index (MSCI ACWI), which measures the performance of global equity markets adjusted for free float market capitalization ), related non-market capitalization-weighted indices and custom indices.
Morgan Stanley Capital International said Jan. 25 that it will remove the securities if the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) does not provide new guidance on the issue by 12 p.m. ET on Jan. 26. So far, the office has not commented on the issue.
President Joe Biden, who just took office a week ago, has yet to say how he plans to implement Trump’s executive order forcing the divestment of Chinese securities, but he could rescind it.
Asked about the issue at a Jan. 25 press conference at the White House, White House Press Secretary Sarah Sachs said the Biden Administration is just beginning a very complex review and assessment of a series of issues involving regulatory actions and issues related to Chinese investments.
As I mentioned, they will require, as I mentioned, cross-sectoral assessments,” she said. The State Department, the Treasury Department and several other departments will be evaluating how we act. We are starting with a patient approach when it comes to our relationship with China. That means that we need to consult with our allies. We will be consulting with Democrats and Republicans. We will allow the cross-sector review to go through its process to consider and assess how we should move forward with our relationship.”
On the day of President Biden’s Jan. 20 inauguration, three Chinese state-owned telecommunications companies that were delisted by the New York Stock Exchange asked the NYSE to reconsider the decision made by the Trump Administration against them.
Former President Trump had barred Americans from investing in Chinese companies that the U.S. Department of Defense said were tied to the Communist Party’s military.
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