Goldman Sachs, JPMorgan and Morgan Stanley plan to reduce their exposure to Chinese telecommunications companies named in a US ban on investing in companies, according to Washington, linked to the Chinese military.
Wall Street companies in Hong Kong, including Goldman Sachs and JPMorgan, have made plans to reduce their exposure to Chinese telecommunications companies targeted by a US ban on investing in companies Washington considers linked to the Chinese military.
Parts of the ban were due to go into effect later Monday.
Goldman Sachs, JPMorgan and Morgan Stanley said in Hong Kong Stock Exchange filings on Sunday night that they would delist 500 Hong Kong-listed structured products that are linked to or are linked to telecoms companies China Mobile, China Telecom and China Unicom. local products. indices including the Hang Seng Index – whose constituents include telecommunications companies.
In a separate statement, US custodian bank State Street said that an exchange-traded fund it manages that tracks the Hang Seng Index will not make any new investments in sanctioned stocks, although it will continue to maintain its existing holdings.
According to the statement, according to information released by the US Office of Foreign Assets Control (OFAC), the fund was no longer suitable for US individuals or companies to invest in.
The announcements follow last week’s OFAC statements clarifying an order from US President Donald Trump in November that banned Americans from investing in Chinese companies that the United States considers to have ties to the Chinese military .
The documents filed by the investment banks cited an element of guidance from OFAC indicating that the three telecommunications companies were specifically included in the initial executive decree.
They also said the order would take effect for structured products from 9:30 a.m. EST (2:30 p.m. GMT) Monday, when Wall Street opens.
From Tuesday, trading in the affected products will be limited, with investment banks buying only from investors and not selling, until January 25, when all operations will be suspended. The products will be delisted on January 28.
The operator of the Hong Kong Exchanges and Clearing Stock Exchange said it was “working closely with the issuers concerned to ensure an orderly delisting and facilitate repurchase agreements put in place by the issuers.”
There are over 12,000 structured products listed in Hong Kong and issued by 15 companies.
Alex Wong, director at Ample Finance Group in Hong Kong, said the write-offs would “not have too much of an impact” as clients could turn to issuers based in Europe or China.
Hong Kong’s market watchdog, the Securities and Futures Commission, said it has stressed to investment banks that “any action they take should be necessary, fair, and in the best interests of investors and the public. integrity of the market, and that investors should also be properly informed, where applicable. “
Hang Seng Indexes Co Ltd, Hong Kong’s leading index provider, did not immediately respond to a request for comment.
Global index providers MSCI Inc, FTSE Russell and S&P Dow Jones Indices said last week they would remove China’s three telecommunications companies from benchmarks, wiping out $ 5.6 billion from the value of their shares traded in Hong Kong on Friday.
The New York Stock Exchange – after a few about-face – announced last week that it would withdraw U.S. certificates of deposit from the three companies traded in the United States on Monday.
China’s Foreign Ministry has previously said it strongly opposes what it calls the US abuse of its power to oppress Chinese companies.