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More Chinese Stocks Removed From FTSE Russell, S&P Dow Jones Indices

By Bernice Napach

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What You Need to Know

  • The removals follow President Biden's order banning U.S. investments in “Chinese Military-Industrial Complex Companies.”
  • They build on earlier index deletions of Chinese companies following a similar ban from former President Trump.
  • The index deletions take effect on July 28 (FTSE Russell) and Aug. 2 (S&P Dow Jones).

Index providers FTSE Russell and S&P Dow Jones Indices are each removing about 20   additional Chinese stocks from their indexes as a result of a White House ban on U.S. investments in Chinese companies tied to defense, intelligence, security research and surveillance technology.

President Joe Biden issued the ban in early June following up on a previous ban issued by former President Donald Trump. The ban applies to what the administration calls “Chinese Military-Industrial Complex Companies.”

FTSE Russell and other index providers had removed several Chinese stocks previously and are expanding the number of removals. FTSE made the latest changes after reviewing comments from index users to a request for feedback on Biden’s executive order.

FTSE is removing 20 stocks from FTSE Global Equity Index Series (GEIS), which is a broad series that covers all market caps from micro to large-cap across 49 developed and emerging markets, and from the FTSE Global China A Inclusion indexes on July 28. Chinese A shares are Chinese stocks that trade domestically on the Shanghai and Shenzhen Stock Exchanges.

S&P Dow Jones Indices is removing 25 Chinese stocks from its indexes on August 2.

The stocks removed by FTSE Russell and S&P Dow Jones Indices include Aerospace CH UAV, Avic Aircraft and China Shipbuilding and Zhonghang Electronic Measuring Instruments.

China’s foreign ministry spokesman Wang Wenbin said the changes “will only hurt the image of and cause losses to the indices themselves,” according to Reuters.

The same day that FTSE Russell and S&P Dow Jones Indices announced the removals, BlackRock elevated the stature of Chinese stocks, saying they no longer belong in the emerging market category and situated them in a new standalone category, between emerging and developed markets.

Bernice Napach

@Think_Napach

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