MSCI to remove 10 Chinese securities from its indices after US blacklist

MSCI, a major US investment index compiler, said on Tuesday that it would remove Chinese securities that President Donald Trump has blacklisted because of suspected ties with Chinese military.

The securities being deleted are stocks listed in Hong Kong and Shanghai by Semiconductor Manufacturing International Corp (SMIC), China Communications Construction Co, China Spacesat, China Railway Construction, CRRC Corp, Hangzhou Hikvision and Dawning Information Industry.

The securities will be removed from the MSCI Global Investable Market Indexes (GIMI), related non-market capitalisation weighted indices and from relevant custom indices as of the close of business on January 5.

MSCI’s decision was made after Trump issued an executive order on November 12 that barred Americans from investing in 31 Chinese companies that are deemed to be associated with the People’s Liberation Army. That list has since increased to 35 firms.

”People’s Republic of China is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses, which continues to allow the PRC to directly threaten the United States homeland and United States forces overseas,” Trump said in the executive order.

The order takes effect from January 11, 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.

07:16

Hong Kong stocks will be 'fairly volatile' amid coronavirus, US-China tensions, says analyst

Hong Kong stocks will be 'fairly volatile' amid coronavirus, US-China tensions, says analyst

Financial markets have been drawn into the Trump administration’s efforts to separate the US economy from China’s, following bilateral conflicts on the trade and technology fronts.