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SP DJI to Remove Chinese Firms from Equity, Bond Indices

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SINGAPORE, Dec 10 Reuters SP Dow Jones Indices said on Thursday it would remove 10 Chinese companies from its equity indices, including Hikvision and SMIC, following a Trump administration order prohibiting purchases by U.S. investors of certain Chinese securities.

These securities will be deemed ineligible from equity indices prior to the market open on Dec. 21, SP DJI said.

It will also remove certain securities issued by additional Chinese companies in its fixed income indices prior to the open on Jan. 1.

Following are analysts comments

JIM MCCAFFERTY, JOINT HEAD OF APAC EQUITY RESEARCH, NOMURA, HONG KONG

Its a very defensive move….Its a recognition that China is a threat economically and commercially and actually, in a way, I think it tells you that Chinas got some good companies, with good IP and good technology.

Clearly, passive money managers will move with the index. But I think the active funds, they would to a certain extent try to ignore some of this benchmarking, which is very political. If youve got fundamental analysts which are part of the investment process, and they make decisions about which global technology firms are most attractive in terms of revenue growth, profitability growth and outlook…theyll want to be invested in these names.

KAY VAN PETERSON, GLOBAL MACRO STRATEGIST, SAXO CAPITAL MARKETS, SINGAPORE Its significant and even more importantly its not necessarily going to be unwound by the Biden administration. There are more…

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