Abacus | It’s time Hong Kong got a US sanctions-busting stock index
- The US government has already muscled in on investors, making 35 Chinese companies un-investible. And it is unlikely to stop there
- The major global index providers: MSCI, S&P Dow Jones, FTSE-Russell and Bloomberg are all likely to comply, but it could crack their market dominance
AS IF LIFE WASN’T TOUGH ENOUGH
It sounds a little ridiculous, right? Especially the Singapore example! But that is exactly what has happened with the US government sanctions on Chinese companies in the latest spat between the two countries, resulting in them being taken out of the global investment catalogue. And this is almost certainly not the end of it either.
The reasoning behind the US move is that its pensioners’ money that is flowing into Chinese companies apparently puts them at risk, supports activities in China that the US disagrees with and could undermine US national security. Given that US investors demanded better access to Chinese companies through their pension investment vehicles, such red flags should surely have been spotted much earlier.
If earning a crust in finance wasn’t tough enough these days, the major indices that futures traders, asset managers and Exchange Traded Fund (ETF) providers use to trade, hedge and create new products is another part of the financial industry that now can be meddled with by governments.
Having created thematic indices myself for use in asset management portfolios, and having launched a domestic fund in Japan for retail investors based on carefully compiled themes that would dominate the investment landscape in the future, this really bothers me.
02:45
‘Made in Hong Kong’ sauce factory suffers as US-China tensions escalate
NO FT, NO COMMENT