SHANGHAI (Reuters) – As US investors dump stocks of black-listed Chinese companies by outgoing President Donald Trump, bargainers in China are taking the opposite side of the trade, which looks like the Joe Biden president would overturn the investment ban. .
Trump signed an executive order on November 12, which purports to invest American securities in Chinese companies allegedly owned or controlled by the Chinese military.
Outgoing US presidents are considering expanding to blacklist 35 firms to include Alibaba and Tencent.
As American investors rush to sell shares in sanctioned companies and their subsidiaries before the executive order comes into force on 11 February, Chinese investors are swooning.
Since the order was announced, China-Hong Kong Connect roughly three through China-Hong Kong Connect in Hong Kong-listed shares of China Railway Construction Corp (CRCC) and CNOOC Ltd., according to Bons operator Hong Kong Exchange and Clear Limited. Holdings through the fold.
Other blacklisted stocks, including railway equipment manufacturer CRRC Corp, China Communications Construction Co. and semiconductor giant SMIC, also saw a huge funding crunch.
Chinese retail sector investor Zhu Haifeng said he bargained for CNOOC and CRRC, which both lost more than 27% after Trump’s order.
“They are globally competitive companies, and are China’s’ name cards’,” said Zhu, who sees limited impact on companies’ core principles from US sanctions.
Wan Chengshui, portfolio manager of Hangzhou-based Golden Eagle Fund Management Company, said he plans to increase his holding in Tencent if further deterioration occurs.
“Trump politicized everything in the name of national security. When Biden takes office, I think things will improve, ”Vann said, predicting Trump’s executive order would be impaired, and there would be no sanctions against Tencent and Alibaba.
Van is not alone.
After news of a possible blacklisting on Thursday when Tencent slipped nearly 5% in Hong Kong, Chinese investors plunged a net HK $ 4.6 billion ($ 593.29 million) in their shares through a cross-border trading channel, making it Became the most actively traded stock. Plan on that day.
Global index publishers MSCI, FTSE Russell and the S&P Dow Jones index have all scrambled to delete blacklisted securities from their global benchmarks, allowing passive investors to shed those holdings.
Philip Wool, head of investment solutions at Royal Global Advisors, said investors could dump active shares to neutralize passive shares.
“Non-US investors will pay attention to the prices of those falling stocks and at some point, it will decide a buying opportunity,” Wool said.
Meanwhile, there is an atmosphere of uncertainty about the scope and implications of Trump’s executive order, while the gradual expansion of the list is another guessing game, Wool said.
Hence “there is also a potential opportunity for active investors in terms of how the political situation may unfold in terms of changing the rest of the market.”
After taking a U-turn twice this month on the issue, the New York Stock Exchange said on Wednesday that it would distribute to three Chinese telecom companies.
Since the NYSE’s first delisting announcement on January 1, Chinese investors have been staunch buyers. On the mainland, under Connect in China Mobile Limited, China Telecom Corp Limited and China Unicom Hong Kong Limited have jumped 37%, 28% and 41% respectively.
($ 1 = 7.7534 Hong Kong dollars)
Reporting by Samuel Shane and Andrew Galbraith; Editing by Vidya Ranganathan and Kim Coghil