MSCI and index compilers to drop China Mobile, Chinese telecoms stocks from global benchmarks

MSCI said it would drop three of China‘s biggest telecommunications companies from several of its global equity benchmark indices on Friday in response to a US executive order restricting ownership of companies with purported ties to the Chinese military.

The index compiler said it would drop the Hong Kong-traded shares of China Mobile, China Telecom and China Unicom from its family of MSCI ACWI indices and MSCI China All Shares indices at the close of business on Friday, following further guidance from the Office of Foreign Assets Control (OFAC), an arm of the US Treasury Department.

S&P Dow Jones Indices said on January 6 it would remove the telecoms trio before the start of trading on Monday. FTSE Russell will also do the same to some of its stock, bond and other associated indexes on Monday.

The announcement came after the New York Stock Exchange (NYSE) said it would delist the American depositary shares (ADS) of the three Chinese telecoms beginning Monday. The NYSE originally announced on January 1 it would delist their shares, but reversed course several times this week until it received updated guidance from OFAC.

Last November, President Donald Trump signed an executive order that barred American investors, including pension funds and university endowments, from owning or trading securities of 35 companies and dozens of subsidiaries that the Trump administration claims are controlled by Chinese military.