From January 11, 2021, U.S. stock exchanges will ban companies that the U.S. government says work with the Chinese military and intelligence services. To apply this new measure, which comes following a decree signed by Donald Trump in November 2020, American shareholders have until November 2021 to dispose of their stakes.
The New York Stock Exchange (NYSE) will remove 35 Chinese companies from its list, including the main telecommunications operators: China Mobile, China Telecom, and China Unicom Hong Kong. Also concerned are companies in the surveillance, aerospace, shipbuilding, construction, technology sectors, as well as the main microprocessor production company.
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Microprocessors: the costly forced independence of China
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Last month, some stock indexes, including the Dow Jones, removed the securities of the companies concerned, but omitted those issued by subsidiaries, or other affiliates. For example, the United States Treasury recently said it would add subsidiaries that are majority owned or controlled by one of the companies on the list. The branch that manages the treasury’s economic sanctions also said the ban covered derivatives, certificates of deposit, index funds and mutual funds.
So-called “political” restrictions with a “limited” impact
Chinese side, according to Reuters for the South China Morning Post, diplomats have “expressed the hope that the election of Joe Biden will help ease tensions between the two countries.” In addition, the Securities Regulatory Commission denounces this decision which, according to its website, “completely ignores the real situation of companies as well as the rights and legitimate interests of global investors and seriously undermines the normal rules and order of market “.
On Sunday January 3, during a meeting, senior officials of the commission called the restrictions “political”, indicating that their impact will be “limited”. Indeed, these companies have the Chinese stock exchanges, as well as their national market, which has hundreds of millions of customers, and where investments are supported by Beijing, which makes 5G a national priority. According to Wall Street Journal, Alibaba and JD.com have obtained secondary listings on the Hong Kong Stock Exchange.
Since the NYSE listing of China Mobile, the largest of the three telecommunications companies, US stocks have returned 648%, according to Dow Jones figures. Nevertheless, 2020 was not a successful year, the value of China Mobile fell 29%, that of China Telecom suffered a drop of 30%, and it goes up to 39% for China Unicom.
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