Global index providers FTSE Russell and MSCI will remove three more Chinese companies from indexes, in response to a White House order banning investments in publicly traded companies deemed to be supporting China's military.
S&P Dow Jones Indices said it will remove the three telecommunications companies from its equity and fixed-income indexes.
The actions announced Thursday by the index providers follow clarifications published Wednesday by the Treasury Department's Office of Foreign Assets Control "that may impact the investability of MSCI indexes by certain investors," MSCI said in a statement.
All three index providers began removing Chinese companies from global and China indexes in early December in response to President Donald Trump's executive order. At the time, FTSE Russell also cited feedback received from index subscribers and other stakeholders and its index policy guide for when clients are unable to trade in a market, including when sanctions are imposed.
The three latest securities to be deleted by MSCI at the close of business Friday — China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd — represent 0.81% of the MSCI China All Shares IMI.
In a separate statement, FTSE Russell said its latest deletions follow the OFAC clarifications plus guidance issued by the Treasury Department.
The deletions from the FTSE China Index, FTSE Global Equity Index Series, the FTSE Global China A Inclusion indexes and associated indexes, will be effective when markets open Jan. 11, FTSE Russell said.
On Wednesday, the New York Stock Exchange cited the new guidance for its decision to remove the three major state-run telecommunications companies from the exchange, after initially deciding not to, and trading will be suspended early Jan. 11.
Sen. Marco Rubio, R-Fla., blamed NYSE's reversal on "misguided, erroneous guidance" from the Treasury Department that he called "a blatant attempt to serve the interests of Wall Street and the Chinese Communist Party at the expense of the United States."
In a statement, Mr Rubio said, "I hope that this embarrassing incident makes clear that there is a strong, bipartisan consensus that the United States will not allow China's exploitation of U.S. capital markets, or Wall Street's role as facilitator, to continue unimpeded."
