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MSCI excludes 7 Chinese companies from some indexes US regulation

Index calculation company MSCI announced on the 15th that it would exclude seven Chinese companies from some indexes. Measures regulated by the United States.

Meanwhile, it has announced that it will launch several new versions of the index that retain these companies’ shares.
According to MSCI’s announcement, exclusions include Core International Integrated Circuit Manufacturing (SMIC), China Communications Construction, and Hikvision.

Following the Trump administration’s actions banning investment in Chinese companies that are considered to be linked to the Chinese military, other index-calculating giants have also indicated that they will be excluded from the index.
Excluded stocks fell slightly in the Asian market on the 16th. Hikvision fell 1.4%. The company has claimed that its designation on the U.S. regulated list is “unfounded.”

In a statement to Reuters, the White House welcomed the MSCI decision.

A spokesman for the United States National Security Council (NSC) said, “U.S. investors have unknowingly funded Chinese military-related companies for years. These companies (by the People’s Liberation Army) have U.S. military personnel. I’m helping to threaten you. ” “Under President Trump’s command, this situation is over,” he said.
MSCI explained that its decision was based on the opinions of more than 100 market participants in the United States and abroad.

The exclusion will take effect on January 5, next year, when the transaction ends. Subsidiaries and affiliates of regulated companies are not excluded from the index.

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If the U.S. government changes regulated companies, it might be excluded from the index in the future.
Investors may find it useful, but it depends on how widespread its use as an indicator is that MSCI has announced a policy to launch a new index to keep shares in excluded Chinese companies. Pointed out.

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“Many non-US investors are free to take advantage of the new index to keep their stocks covered, but in any case follow the practices of major U.S. investment firms,” said Tariq Denison, managing director of GFM Asset Management (Hong Kong). Will be. “

Other seven companies excluded by MSCI are China Railway Construction, China Spacesat (China Eastern Hongweixing Satellite Co., Ltd.), China Railway Construction, and Dawning Information Industry.

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