China’s Huawei to be excluded from influential JPMorgan bond indices

Stock Markets20 minutes ago (Jun 09, 2021 04:45AM ET)

(C) Reuters. FILE PHOTO: Logo of Huawei is seen in front of the local offices of Huawei in Warsaw, Poland January 11, 2019. REUTERS/Kacper Pempel/File Photo

By Marc Jones

LONDON (Reuters) – U.S. bank JPMorgan (NYSE:JPM) said it will exclude Huawei’s dollar bonds from some its most influential investment indices from the end of next month, following the latest ratcheting up of U.S. sanctions on Chinese technology firms.

U.S. President Joe Biden’s administration issued a new executive order https://www.federalregister.gov/documents/2021/06/07/2021-12019/addressing-the-threat-from-securities-investments-that-finance-certain-companies-of-the-peoples last week banning U.S. entities from buying or selling the publicly-traded securities of 59 Chinese companies with alleged ties to defense or surveillance.

“Huawei USD-denominated bonds will be excluded from J.P. Morgan fixed income indices (including the CEMBI and JACI families) since the issuing entities for these securities (Proven Glory Capital Ltd. and Proven Honour Capital Ltd.) are explicitly named and in scope of the Amended Order,” JPMorgan said in a note to index users late on Tuesday.

It added that the exclusion would happen on July 30. Huawei’s bonds currently have a 9 basis points weight in the widely-tracked CEMBI Broad Diversified index of emerging market companies, 36 bps in the Asia-focused JACI index and 38bps in the environmental, social and governance (ESG) version of the JACI.

The U.S. investment bank estimates the CEMBI and JACI index groups have more than $140 billion and $80 billion in assets benchmarked to them respectively – money which relates to the global investment funds that use these kind of indices as a shopping list of what to buy.

Huawei, which is China’s leading telecommunications equipment maker, was first put on a U.S. trade blacklist in May 2019 due to national security concerns. Huawei has repeatedly denied it is a risk.

The ban put Huawei’s handset business under immense pressure. Once the world’s biggest smartphone maker, Huawei is now ranked sixth, with a 4% market share in the first quarter.

JPMorgan said new and existing bonds from Huawei and Semiconductor Manufacturing International Corp will remain excluded from the indices.

Those of China National Chemical and Sinochem will remain in, meanwhile, after they were not included in last week’s new sanctions list.

China’s Huawei to be excluded from influential JPMorgan bond indices

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Stories

Discover

The Nubank EC-1

Brazil is a country riven with economic contradictions. It has one of the largest...

How contrarian hires and a pitch deck started Nubank’s...

For most startups, the hardest early challenge is identifying a market and a product...

One woman’s drive to make a neobank as magical...

As we mentioned in part 1 of this EC-1, David Velez had two key...

How Nubank’s CX strategy made it one of the...

As we saw in parts 1 and 2 of this EC-1, by mid-2013, Nubank...

Which Nubank will own the financial revolution?

Nubank’s first office, on California Street in the Brooklin neighborhood of São Paulo, makes...

Beats Studio Buds offer a compact design, noise-canceling and...

When they were released in 2019, Powerbeats Pro were standouts. Two-plus years later, they...

Popular Categories