Nasdaq said on Friday (Dec. 11) it removed four Chinese companies from its index, including SMIC, in response to a U.S. government order restricting stock purchases.
Nasdaq said in a statement that the stocks, which are not traded on the Nasdaq exchange, will be removed from the index on Dec. 21, Reuters reported. The stocks include China Communications Construction Co., China Railway Construction Co., China CNR Corp. and SMIC.
President Donald Trump signed an executive order on Nov. 12 that bans U.S. investments in companies owned or controlled by the Communist Party of China’s military from Jan. 11 next year, and limits the withdrawal of such investments to Nov. 11 next year. The latest executive order prohibits U.S. companies and individuals from owning shares in these Chinese companies, either directly or through funds.
On Dec. 3, the U.S. government officially blacklisted four other CCP companies – SMIC, CNOOC, China Construction Technology, and CIECC – from the Pentagon.
The U.S. Department of Defense believes the four Chinese-owned companies are owned or controlled by the Chinese Communist Party military, endangering U.S. national security and therefore restricting U.S. investors from investing in them.
A Nasdaq spokeswoman said the four Chinese companies removed by Nasdaq are the only ones on the Nasdaq index that are on the Trump administration’s blacklist. Nasdaq leaders were not immediately available for further comment.
A spokesman for index provider MSCI said by e-mail Friday that the company has discussed possible changes with clients and will communicate “any necessary changes” as soon as possible.
FTSE Russell said on Dec. 4 that it would remove shares of eight Chinese companies, including Hangzhou Hikvision, China Railway Construction Corp. and China Spacesat, in light of the White House executive order.
On Dec. 9, S&P Dow Jones, the world’s second-largest index provider, issued an announcement on its website stating that some Chinese companies’ stocks or bonds will be removed from the relevant indexes, with individual stocks removed by the opening of trading on Dec. 21 and the portion of bonds implemented by the opening of trading on Jan. 1, 2021.
The stocks to be removed from the S&P Dow Jones related index products include the A shares, H shares and ADRs of 10 companies, including China CNR, China Communications Construction, China Chemical, China Construction International, China Nuclear Construction, China Railway Construction, China Satellite, CSC Shuguang, Hikvision and SMIC.
The U.S. government has now identified 35 Chinese companies working to modernize the Communist Party’s military, including large state-run aviation, shipbuilding and construction companies as well as high-tech companies such as the Inspur Group, which help the Communist Party’s military gain access to advanced technology and expertise as well as promote the Communist Party’s military expansion ambitions around the world.
Recent Comments