Trump bans US investments in what he calls Chinese ‘military-controlled’ companies, sending Hong Kong, China markets lower

Hong Kong’s benchmark Hang Seng Index declined for the third straight day, slipping by 0.05 per cent, while the Shanghai Composite dropped 0.9 per cent

Losses in Hong Kong’s benchmark were led by China Mobile, a bellwether utility stock on Trump’s executive order

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China Mobile is among the 31 companies in which US investors have been banned from holding equity investments. Photo: Reuters

Published: 10:32am, 13 Nov 2020Updated: 11:33pm, 13 Nov 2020

Donald Trump upped the ante in his conflict with China even as he refused to concede the presidential election 10 days ago, with an overnight executive order banning American investments in companies with suspected ties to the “Communist Chinese military.”

The executive order, Trump’s first policy action since the November 3 presidential election, would ban investments in 31 companies including China Mobile and China Telecom, from a list of 20 names compiled in June and a list of 11 Chinese entities highlighted in August. The order takes effect from January 11 next year, nine days before the inauguration of president-elect Joe Biden, and US investors holding the stocks will be given a grace period until November 11, 2021 to sell them.

The move, while largely symbolic, weighed on the stock markets of Hong Kong and China, highlighting the potential havoc that Trump can still wreak on global markets and economies, using the executive actions available to the world’s most powerful office in the remaining 10 weeks of his presidency. Hong Kong’s benchmark index fell for the third straight day, with similar declines in the main gauges on the Shanghai and Shenzhen markets.

The president “may be tempted to flip over the chess board and leave Biden to pick up the pieces,” said Gabriel Wildau at Teneo Risk Advisory in New York. “The outgoing administration may also be seeking to place Biden in a bind by imposing actions that create chaos but that would be politically difficult for a Biden administration to reverse, since doing so would expose them to criticism that they are soft on China.”

“The People’s Republic of China (PRC) is increasingly exploiting United States capital to resource and to enable the development and modernisation of its military, intelligence, and other security apparatuses,” Trump said in a statement.