Nasdaq, S&P DJI removes Chinese firms after US order
13 December, 2020 | Rakshanda Afrin
Following increasing Sino-US tensions, S&P Dow Jones Indices became the second major index provider to remove some Chinese firms from its index products.
Following increasing Sino-US tensions, S&P Dow Jones Indices became the second major index provider to remove some Chinese firms from its index products. It happened after following the outgoing Trump administration executive order. S&P DJI said it would remove mainland-listed A-shares, Hong Kong-listed H-shares, and American Depositary Receipts (ADRs) of 10 companies including Hangzhou Hikvision Digital Technology Co Ltd and Semiconductor Manufacturing International Corp (SMIC) from all equity indexes prior to the market open on Dec. 21.
The company said it will also remove securities issued by 18 Chinese companies from its fixed income indices before Jan. 1. The index providers’ moves to comply with the U.S order effectively shut passive investors out of the stocks and bonds affected and could challenge investors’ assumptions that a Joe Biden administration will mean a warmer relationship with China.
In a very severe and major blow to the Chinese administration, the United States President Donald Trump’s administration had increased economic pressure on China’s western region of Xinjiang. In the latest, US has banned cotton imports from an influential Chinese producer citing that it says uses the forced labour of detained Uyghur Muslims.
This move is seen as having a sweeping effect on companies involved in selling textiles and apparel to the US. As per official White House sources, in its final week, Trump administration has been working to harden the US position against China. Such circumstances will make it more difficult for President-elect Joe Biden to ease US-China tensions.