China Mobile, China Telecom, and China Unicom Hong Kong have been dropped from the MSCI Inc, FTSE Russell, and S&P Dow Jones stock indexes due to the recent U.S. investment ban that has battered their share prices.
The deletions of the Chinese telecoms add to a raft of Chinese firms already dropped from indexes because of the U.S. vetoes.
These companies rely on several passive investors, and the announcements wiped a total of $5.6 billion off the value of their Hong Kong-traded shares on Friday.
The index deletions stem from an order by the incumbent President Donald Trump, which bans Americans from investing in Chinese companies that the U.S. believes have ties to the Chinese military.
MSCI said it would remove the three companies from the China indexes on Jan. 8, and FTSE Russell said they would be cut from the Global Equity Index series and China A Inclusion indexes on Jan. 11.
S&P Dow Jones Indices will remove Hong Kong-traded shares of the three companies, as well as fixed-income securities of China Telecom and China United Network Communications Co Ltd on Jan. 12.
China Telecom and China Unicom Hong Kong said they expected the NYSE (New York Stock Exchange) delisting to dent share prices. China Mobile said it reserves the right to protect its interests.
China’s foreign ministry said it strongly opposes what it called abuse of U.S. power to oppress Chinese companies.
Fund managers say the market impact could be short-lived as non-U.S. investors are likely to step in and buy the shares.
But the potential for expanding the scope of the rules has kept some investors nervous – especially after news that the ban could be extended to tech giants Alibaba and Tencent.
Goldman Sachs estimated that about $77.5 billion in Chinese offshore bonds could be restricted.
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