FTSE Russell, a leading global indexing services company, announced that it will remove the stocks of eight Chinese companies from its respective indexes.
The announcement comes after President Trump’s administration issued an executive order on November 12 explicitly prohibiting anyone in the United States from investing in Chinese companies that Washington believes are owned or controlled by the Chinese military. The order will take effect on Jan. 11 next year.
A spokesman for parent company London Stock Exchange Group said in a statement Friday (Dec. 4) that FTSE Russell said it would drop its investments in Hikvision, China Iron Construction Co. Corp. and China Spacesat. The other five companies are China Communications Construction Corp, China National Nuclear Engineering & Construction Group Corp, China National Vehicles Corp, Shuguang Information Industry Co and China National Chemical Corp.
In a statement released after the U.S. stock market closed on Friday, FTSE Russell said the decision to remove it from the FTSE Global Equity Index Series and several other indices will take effect on Dec. 21.
The Russell’s rival, New York-based MSCI, had said its products would “reflect any necessary changes” under U.S. law.
FTSE Russell had previously said it was evaluating the securities. The company said it may drop more companies based on the findings of U.S. officials.
The eight Chinese companies are at the top of the Pentagon’s blacklist of “Chinese Communist military-industrial enterprises. Reuters reports that a spokesman for Hikvision said the inclusion of Hikvision in the blacklist was “unfounded” because the company has never been involved in research and development for military use.
In a statement, the spokesperson said, “Hikvision strives to cooperate fully with the U.S. government and to answer questions from policymakers in a transparent manner. The statement also said, “We are always working to correct misconceptions about the company and our business.”
China Railway Construction said it could not immediately respond to Reuters’ request for comment. The other six companies could not be reached by Reuters on Saturday, a non-business day.
The Pentagon this week added SMIC, China’s largest chipmaker, and oil giant CNOOC, among four other companies, to the list of banned companies. FTSE Russell spokesman Tim Benedict said the company was aware of the additions, adding that “we will evaluate them at the appropriate time”.
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