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Factbox: Benchmark index providers remove Chinese firms after U.S. investment ban

01/08/2021 | 01:05am

(Reuters) - Global index providers and the New York Stock Exchange have cut Chinese companies named in a U.S. Defense Department list from their products, following a government order forbidding investors in the United States from buying them.

Here is an overview of the actions of the NYSE and index companies MSCI Inc, FTSE Russell and S&P Dow Jones Indices so far:

WHAT HAPPENED?

- An executive order from the White House https://www.whitehouse.gov/presidential-actions/executive-order-addressing-threat-securities-investments-finance-communist-chinese-military-companies banned Americans from investing in Chinese companies on a Defense Department list https://www.defense.gov/Newsroom/Releases/Release/Article/2434513/dod-releases-list-of-additional-companies-in-accordance-with-section-1237-of-fy after Nov. 11, 2021.

- There are 35 firms on the list and the Defense Department says they have links to the Chinese military, an assertion many of the companies deny and which China's government has said lacks evidence.

- Subsidiaries with similar names to companies on the list are covered by the sanctions, the U.S. Treasury said on Jan. 6 https://home.treasury.gov/policy-issues/financial-sanctions/faqs/864.

RESPONSE SO FAR

- Twenty four of the affected companies had affiliates listed on major exchanges in December, according to the U.S. State Department https://www.state.gov/u-s-investors-are-funding-malign-prc-companies-on-major-indices.

- The New York Stock Exchange said on Wednesday it will delist U.S.-traded American Depositary Receipts of three Chinese telecom firms.

- A total of 15 different companies will be removed from equity indexes. MSCI removed 12, S&P DJI 13 and FTSE Russell 14.

- S&P DJI removed 18 companies from bond indexes.

- Affected indexes include global benchmarks as well as China indexes such as the FTSE China A50 and China 50.

- Index makers have refrained from removing some subsidiaries, and still include the Hong Kong-listed entity of CNOOC Ltd.

- Most deletions have already taken effect, although the NYSE delistings do not occur until Jan. 11. MSCI does not remove China Mobile, China Telecom or China Unicom until Jan. 8 and FTSE Russell does not remove those firms until Jan. 11 either.

- MSCI and FTSE Russell removed only A-share, or mainland, and H-share, or Hong Kong, listings. S&P DJI also deleted some U.S.-traded American Depositary Receipts (ADRs). FTSE Russell indexes do not include ADRs.

(Compiled by Tom Westbrook in Singapore and Samuel Shen in Shanghai; Editing by Kirsten Donovan, Mark Potter, Subhranshu Sahu and Sherry Jacob-Phillips)

© Reuters 2021
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