Saturday, January 23, 2021

US banks to write off hundreds of products listed in Hong Kong under Trump rules

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JPMorgan, Morgan Stanley and Goldman Sachs are set to delist 500 structured products listed on the Hong Kong Stock Exchange, as the fallout from President Donald Trump’s executive order banning investments in companies with suspected ties to the Chinese military widens.

In his final days in office, Mr. Trump sought to crack down on Beijing before Democratic President-elect Joe Biden was inaugurated later this month.

In addition to banning the purchase of shares in dozens of Chinese companies suspected of being linked to the People’s Liberation Army, the outgoing president has also moved to restrict transactions with Chinese payment apps, including Alipay, WeChat Pay, and Tencent’s QQ wallet.

JPMorgan, Morgan Stanley and Goldman Sachs move follows a decision by MSCI on Friday to remove Chinese state-owned telecommunications companies China Mobile, China Telecom and China Unicom from their closely watched stock benchmarks to avoid possible legal penalties stemming from the decree, which is expected to take effect on January 11.

Hong Kong Exchanges and Clearing said the decision to withdraw 500 structured products was a “direct result” of US sanctions, adding that it would continue to monitor developments.

“HKEX is working closely with the issuers concerned to ensure an orderly delisting and to facilitate buyout agreements arranged by the issuers,” he said on Sunday. “We don’t believe this will have a significant negative impact on the Hong Kong structured products market, the largest in the world with over 12,000 listed products.”

In its efforts to avoid breaking the same regulations, the New York Stock Exchange has been plunged into controversy, moving first to delist the three Chinese telecoms, then reversing the course, before deciding to continue the week. last at the request of the Treasury Department.

Lawyers and financial executives have criticized the Trump administration for introducing ambiguously worded rules and guidelines on how the restrictions will be enforced. Investors have also expressed concerns about confusion sown in recent weeks.

“This type of uncertainty is not attractive to any long-term investor, especially when trying to invest in Chinese state-owned telecommunications companies,” said Deepak Puri, chief investment officer for Americas of Deutsche Bank Wealth Management, in the middle of the NYSE flip. -flop last week.

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