Breaking News

Two Major U.S. Index Providers Are Kicking Some Chinese Stocks Out

Text size

President Joe Biden issued an executive order on June 3 barring U.S. investment in companies with ties to China’s military-industrial complex.

STR/AFP via Getty Images

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 Didi Global (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The executive order was originally made last November, but Biden made updates on June 3, specifying prohibitions against “U.S. investments in Chinese companies that undermine the security or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 (601989: China), 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 (600879: China), Guizhou Space Appliance (002025: China), and others.

The S&P Dow Jones Indices had previously removed Chinese companies like China National Chemical Engineering (601117: China), Advanced Micro-Fabrication Equipment (688012: China), and China State Construction International Holdings (3311: Hong Kong) following the first executive order in November.

Write to [email protected]

Leave a Reply

Your email address will not be published. Required fields are marked *