Two Major U.S. Index Providers Are Kicking Some Chinese Stocks Out
The S&P Dow Jones Indices and FTSE Russell are booting more Chinese companies from their indexes following President Biden’s June 3 executive order barring U.S. investment in companies with ties to China’s military-industrial complex.
The news comes after a tumultuous week centered around Chinese ride-hailing app
(ticker: DIDI). While the index providers’ moves are not directly related to Didi’s troubles, it highlights the complicated nature of investing in China amid heightened regulatory scrutiny inside the country and escalating U.S.-China tensions.
The executive order was originally made last November, but Biden made updates on June 3, specifying prohibitions against “U.S. investments in Chinese companies that undermine the security or democratic values of the United States and our allies.”
As a result, on late Wednesday, S&P Dow Jones Indices announced it would remove 25 Chinese companies from its index on Aug. 2, while FTSE Russell said it would take 20 companies off on July 28. The decision was made at the urging of index users and stakeholders following Biden’s tweaks, FTSE Russell clarified in a statement on their website.
Most of the affected companies are listed on the Shenzhen or Shanghai exchanges. Among the stocks to be removed from the S&P Dow Jones Indices and FTSE Russell are
Aerospace CH UAV
(002389: China) and
Avic Aviation High-Technology
(600862: China). FTSE Russell will take off
China Shipbuilding Industry
CSSC Offshore & Marine Engineering
(600685: China) and
Inner Mongolia First Machinery Group
(600967: China) and others. S&P Dow Jones Indices will remove
China Aerospace Times Electronics
Guizhou Space Appliance
(002025: China), and others.
The S&P Dow Jones Indices had previously removed Chinese companies like
China National Chemical Engineering
Advanced Micro-Fabrication Equipment
(688012: China), and
China State Construction International Holdings
(3311: Hong Kong) following the first executive order in November.
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