BlackRock joins global funds in divesting Chinese telecoms stocks as US sanctions kick in

iShares ETFs have adjusted and will continue to be responsive in accordance with treatment of securities impacted by recent US sanctions

BlackRock was the second-largest holder of China Telecom shares and owned minor stakes China Mobile and China Unicom, as of last week

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Global funds trim their holdings as US-China tensions escalate in the final days of Trump presidency with an investment ban on companies linked to China’s military. Photo: AP

Published: 1:00pm, 12 Jan 2021Updated: 4:44pm, 24 Feb 2021

BlackRock, the world’s biggest money manager, has been selling stakes in three Chinese telecommunication providers after the US put them on its sanctions list and an investment ban kicked in from this week.

The firm reduced its holdings in China Mobile, China Telecom and China Unicom in recent weeks and plans to keep selling, according to a person with knowledge of the matter. One of the biggest investors in the companies, BlackRock is responding to the executive order issued by President Donald Trump in November barring US persons from investments in companies deemed to be owned or controlled by China’s military.

The mandate was part of Trump’s effort to clamp down on China in the twilight of his presidency. His administration has sought to sever economic links and deny Chinese companies access to American capital and technology, especially those judged to pose a threat to US national security. The order prompted the New York Stock Exchange to delist the telecom companies’ American depositary receipts.

New York-based BlackRock, which managed US$7.81 trillion at the end of September, has advised exchange-traded fund clients of changes under way.

“iShares ETFs have adjusted and will continue to be responsive in accordance with their respective indexes’ treatment of securities impacted by recent US sanctions on certain Chinese companies,” it said. “Our funds continue to function as designed, seeking to track the performance of their indexes, trading efficiently and offering daily transparency to holdings.”

A spokeswoman declined to comment further.

Chinese companies affected by the ban are also being removed from indices run by MSCI, S&P Dow Jones Indices and FTSE Russell. China has responded to the US sanctions by imposing a new set of rules to penalise persons or companies that comply with the ban.

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