MSCI Is Third Index Giant to Cull Chinese Stocks Banned by U.S.


MSCI Inc. became the third index provider to delete some Chinese stocks from its benchmarks, after the Trump administration banned U.S. investments in companies with links to the Chinese military.

The firms include China Railway Construction Corp, China Spacesat Co., China Communications Construction Co., CRRC Corp., Hangzhou Hikvision Digital Technology Co., Dawning Information Industry Co. and Semiconductor Manufacturing International Corp, according to a statement late Tuesday. The deletions will take effect at the Jan. 5 close. MSCI will publish its final list at the end of December to reflect any changes to Chinese firms sanctioned by the U.S.

MSCI Is Third Index Giant to Cull Chinese Stocks Banned by U.S.

MSCI’s decision follows similar moves by FTSE Russell and S&P Dow Jones this month. While the companies have minimal weightings on benchmarks, the rapid removals show how effective such orders are in reducing Chinese firms’ access to global capital.

MSCI Inc. Joins Peers in Culling Stocks: What to Watch in China

Trump’s executive order from Nov. 12 bars American investments in Chinese firms owned or controlled by the military amid mounting tensions between the two nations and an escalating trade war. China National Offshore Oil Corp., which will remain on MSCI’s gauges for now, was blacklisted by the Pentagon in early December.

There was little reaction in the affected stocks on Wednesday, with traders saying an announcement from MSCI on the deletions was widely expected. Shares of SMIC dropped 9.8% in Shanghai after the chipmaker said it’s looking into reports about the surprise resignation of a top executive.

©2020 Bloomberg L.P.

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