FTSE Russell will remove eight Chinese companies from its global and China A indexes, the index provider said.
The action, announced Dec. 4, is in response to a White House order banning investments in Chinese companies deemed to be supporting the country's military, and to feedback received from index subscribers and other stakeholders, FTSE Russell said in a statement. It cited its index policy guide for when clients are unable to trade in a market, including when sanctions are imposed.
The removal applies to securities in the FTSE Global Equity Index Series and indexes derived from it, and the FTSE China A Inclusion Index and associated indexes.
The action will take effect Dec. 21, following the FTSE GEIS quarterly review.
The eight companies were identified on a Department of Defense list of "Communist Chinese Military Companies." They include China Communications Construction Co. Ltd., China Nuclear Engineering & Construction Corp. Ltd., CRRC Corp. Ltd., Dawning Information Industry Co. Ltd. and China National Chemical Engineering Co. Ltd.
FTSE Russell could announce more companies could be removed later this week if the Treasury Department's Office of Foreign Assets Control publishes its own list of sanctioned securities before the market closes Dec. 11. In that case, FTSE Russell will evaluate the impact and issue a notification "as soon as practical" but no later than the morning of Dec. 14, it said in the statement.
Sanctioned companies would be considered for reinclusion in standard FTSE Russell indexes 12 months after sanctions are removed. For the purposes of index eligibility, they will be treated as a new issue, FTSE Russell said.