S&P Dow Jones Indices to remove 21 Chinese companies from its global equity, bond benchmarks after US blacklisting
- Hikvision, SMIC among companies to be removed from equity benchmarks beginning December 21
- Trump administration has blacklisted 35 Chinese companies over ties to Chinese military
The firm will also remove securities issued by an additional 11 blacklisted companies from its fixed income benchmarks beginning on January 1, it said in a statement late Wednesday.
People on the streets of Beijing react to Biden's US presidential election victory over Trump
There are 2,009 Chinese companies in its S&P Global BMI Index, one of its biggest benchmarks, with more than 12,500 constituent companies and one of the affected indices, with a combined weighting of 5.1 per cent, according to a November 30 company fact sheet.
Last month, JPMorgan Chase said it had taken initial steps to deal with more than US$41 billion worth of dollar- and euro-denominated debt issued by sanctioned Chinese companies and their units in its emerging-market bond indices.
MSCI and Nasdaq are also understood to be evaluating whether to remove designated companies from their indices, and could make an announcement in the coming days.
The companies to be removed from the S&P Dow Jones equity 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.
They had a combined market capitalisation of US$204.1 billion at the close of trading 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.
They are 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.
Despite that, investors continue to eye potential opportunities in China as Beijing moves to further open its financial markets to foreign investment and more Chinese sovereign debt has been included in global bond indices in the past few years.
Chinese stocks took up 5.16 per cent weight in MSCI ACWI Index — the compiler’s flagship index of 2,990 global large- and mid-cap companies with a combined market value of US$56 trillion — trailing only US and Japanese firms as of November 30. Chinese dollar-based bonds also have more than 50 per cent share in JPMorgan’s Asia Credit Index.