S&P Dow Jones to Remove 21 Blacklisted Companies

The S&P Dow Jones Indices will remove 21 Chinese companies with ties to the People’s Liberation Army from its global stock and bond benchmarks, Reuters reported on Thursday.

Last month President Trump issued an executive order preventing U.S. investors from owning or selling shares of Chinese companies with ties to the country’s government and military.

“Through the national strategy of Military-Civil Fusion, the PRC [People’s Republic of China] increases the size of the country’s military-industrial complex by compelling civilian Chinese companies to support its military and intelligence activities,” the executive order states.

“Those companies raise capital by selling securities to United States investors that trade on public exchanges both here and abroad… In that way, the PRC exploits United States investors to finance the development and modernization of its military.”

S&P Global plans remove 10 companies—including Semiconductor Manufacturing International Corp. (SMIC)—from its equity indices on December 21. It will remove another 11 blacklisted companies its fixed income indices on January 1.

The MSCI and Nasdaq indices are also evaluating whether to remove the companies designated in the executive order, Reuters reports. An announcement is expected in the coming days.

There were over 2,000 Chinese companies on the S&P Global BMI Index as of November 30, according to Reuters’ reporting. In October, the U.S.-China Economic and Security Review Commission found that there are 217 Chinese companies listed on NASDAQ and NYSE, including 13 state-owned enterprises.