Investors clobbered by Trump’s assault on telecom carriers
Published: Jan 12, 2021 08:11 PM

Illustration: Tang Tengfei/GT

Alongside a flip-flop farce of the New York Stock Exchange regarding delisting three Chinese telecom companies last week, there have been other negative effects borne out of Trump's recent restriction on US capital investing in listed Chinese companies. Like the presidency of Donald Trump, the ruthless clampdown appears to be drawing to an end. 

After index providers MSCI and FTSE Russell announced to strip the three Chinese stocks, a leading multinational investment management company BlackRock became the latest financial institution dumping their holdings.

BlackRock reduced its holdings in China Mobile, China Telecom and China Unicom in recent weeks and plans to keep selling, Bloomberg reported, citing anonymous resource.

While it is true that the US has been holding a skewed and baleful attitude toward China's economic development, Trump administration's extreme approaches have led to higher volatilities when it comes to policy-making.

Under the current situation, it would be unsurprising if financial institutions temporarily chose to comply with the outgoing Trump administration's discriminative policies in case any other shocking decisions are made during the last days, before he leaves the White House.

With the relatively moderate Joe Biden taking over the US presidency on January 20, it is expected that the peak of the turmoil ought to come to a stop. Though it does not mean that all frictions between the two nations will disappear, the market could hope for an environment with rising rationality.

The endless assault on Chinese enterprises by the Trump administration has become a double-edged sword. American investors are suffering the consequences, just like Trump's tariffs war toward China which has led to rising job losses in the US and higher costs for American consumers.

On the other hand, affected Chinese firms may not be able to avoid a technical impact in the short term, or undeserved reputation damage. For years, Washington has been stretching the national security concept, defaming Chinese companies, from the 5G frontrunner Huawei and ZTE to the popular short video platform TikTok.

While unwilling to accept his election defeat, the Trump administration shows no intention to cease destructing China-US ties. Its recent move, however, will not only harm the interests of international investors, but also the global standing of American capital markets. 

The undeserved clampdown on the Chinese firms will see a diminishing effect. For instance, the three telecom carriers are mainly operating in China market, and it is the true value of a company that attracts investments, rather than an executive order.

The Chinese government will take necessary measures to safeguard Chinese companies' rights and interests. In the meantime, China, with steady promotion of opening-up, will further expand and facilitate cooperation among cross-border business parties, including the financial industry.

It is expected that the US government will respect the market and rule of law and act in a way conducive to upholding order of the global financial market, protecting investors' lawful rights and interests, and promoting the steady development of the global economy.

The article was compiled based on an interview with Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies of Renmin University of China.

blog comments powered by Disqus