US banks ditch products linked to Chinese stocks after NYSE ban
New York(CNN Business) Wall Street banks are shaking up their offerings in Hong Kong, pulling the plug on hundreds of products to comply with the US ban on several Chinese businesses.
Goldman Sachs (GS), JPMorgan (JPM) and Morgan Stanley (MS) will delist certain products over the course of this month, according to Hong Kong Stock Exchange filings.
Fund manager State Street Global Advisors said in a statement that its Hang Seng (HSI) index tracker TraHK will no longer invest in businesses deemed to be affiliated with or supporting the Chinese military that have been sanctioned under President Donald Trump's November executive order.
Meanwhile, BlackRock (BLK) said in a note to clients that its iShares ETFs have also been adjusted in accordance with the underlying indexes response to the sanctions.
Last week, the New York Stock Exchange banned Chinese telecom companies to comply with the executive order -- although only after flip-flopping on the issue multiple times. The reason for NYSE's initial indecision remains unclear, but it isn't a great look for the worlds' largest stock market. And despite the apparent hesitation, China Mobile (CHL), China Telecom (CHA) and China Unicom (CHU) ceased trading Monday.
Trump also signed an executive order last week banning transactions with eight Chinese payment apps, including Alibaba (BABA) affiliate Ant Group's Alipay. On top of that, the White House is considering prohibiting Americans from investing in Alibaba and Tencent (TCEHY), though it's unclear how likely it is that this ban will come to fruition.
The outgoing Trump administration hasn't made it easy to keep up with the government's view on Chinese firms doing business in the United States. The failed executive orders to ban TikTok and WeChat are prime examples.
Bipartisan pressure to be tough on China is expected to continue in the Biden era
Trump's term is coming to an end, but President-elect Joe Biden isn't expected to reverse the government's position on China when he takes office later this month.
"There is bipartisan pressure to remain tough on China," said Jaret Seiberg, analyst at Cowen, noting that Biden will have "much bigger priorities to advance, such as secure another stimulus [package]."
This could mean US capital markets, as well as accessing the US consumer base, could continue to be a tricky task for Chinese companies.
In fact, Biden could get even tougher on China, Seiberg said.
"That could include asking Congress to shorten the three-year period Chinese companies have to open their audits to inspections before US exchanges have to delist them."
