Top U.S. banks like JPMorgan Chase & Co (NYSE: JPM), Goldman Sachs Group Inc (NYSE: GS), and Morgan Stanley (NYSE: MS) will delist structured products listed on the Hong Kong stock exchange, according to a Financial Times publication on Sunday.
What Happened: Removal of these 500 structured products is the outcome of outgoing President Donald Trump’s executive order prohibiting investments in companies with links to the Chinese military. The executive order also covers Chinese payment and fintech platforms like Alibaba Group Holdings Inc’s (NYSE: BABA) Alipay, and Tencent Holdings Ltd’s (OTC: TCHEY) WeChat Pay, and the QQ Wallet.
The delisted products are associated mainly with Chinese telecom companies like China Mobile Ltd (NYSE: CHL), China Telecom Corporation Ltd (NYSE: CHA), China Unicom (Hong Kong) Limited (NYSE: CHU), along with benchmark indexes like the Hang Seng Index, reports Reuters based on the filings in the Hong Kong exchange.
Why Does It Matter: The MSCI Global Standard Indexes updated its list of securities to be removed to include the three Chinese companies effective from Jan. 8, 2021, as per November’s Executive Order. However, the announcement also said that an MSCI J-Series Index would be available with these deleted securities.
According to Reuters, FTSE Russell and S&P Dow Jones Indices will also remove these structured products eroding a cumulative $5.6 billion from the Hong Exchange.
FT cited the exchange’s statement on Sunday, which said that “HKEX is working closely with the relevant issuers to ensure orderly delisting, and facilitate buyback arrangements being arranged by the issuers.” It continued to state that the U.S. banks’ move may not “have a material adverse impact on Hong Kong’s structured products market.”
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