Last November, the Trump administration announced a ban on US investors holding Chinese stocks with suspected military links. With little initial guidance on which stocks were covered by the ban, investors were at first left guessing as to how their portfolios would be affected. Over the last few weeks, however, updates from the Treasury and moves by index providers to drop offending stocks have gradually filled in the blanks, leading to an emerging picture of the executive order’s impact on major benchmarks. Despite some big names, like China Mobile and CNOOC, falling on the US government’s blacklist and grabbing headlines, the overall weight of banned stocks at the beginning of 2021 was relatively modest, totaling less than 3% of weight in the average China investor’s portfolio, and concentrated among telecom shares, IT stocks, and industrials.
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