President Donald Trump’s move to curb US investment in securities of Chinese companies with links to the military has put pressure on both global index providers and exchange traded fund providers who are scrambling to decide on their response within the tight deadline.
Mr Trump signed the order in mid-November prohibiting “US persons” from “transactions” in securities of 31 Chinese companies that the Department of Defense identified as “Communist Chinese military companies”. The order takes effect on January 11, 2021.
As fund companies in Asia seek legal advice about responding to the ban, most major global benchmark providers have rushed to consult with asset managers and clients, as well as with other index users, on whether to drop the relevant securities of the sanctioned companies.