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US Plans To Limit American Money Chinese Firms, Stocks Of Alibaba & Other Chinese Firms Drop

US Plans To Limit American Money Chinese Firms, Stocks Of Alibaba & Other Chinese Firms Drop
Following reports from the United States that the US White House is planning and contemplating ways to reduce investments from the US in Chinese companies and in China, share prices of some of the well known global Chinese companies such as Alibaba dropped sharply. 
According to reports in the media during the weekend, authorities in the White House are considering whether it is possible and feasible to ban all forms of financial investment from the US in China over the argument that this would help the US government to safeguard the interests of American investors. However the reports quoting sources have said that no decision has been taken by the Trump administration and the pans are not even close to be complete.
The disclosure of the reports resulted in the share of Alibaba dropping by more than 5 per cent while the stock price of Baidu and also dropped by 3.6 per cent and 6 per cent – aloof these companies are listed at the Nasdaq stock exchange.
The sudden news causes a 1.2 per cent drop in the iShares China Large-Cap ETF. China Construction Bank and Tencent holdings are the biggest holdings of the ETF.
According to a report published by Bloomberg News, the option of delisting of all Chinese companies from all stock exchanges in the US is being weighed and evaluated by the Trump administration. It is also considering banning of investments being made in the Chinese financial market by the US government pension funds.
The news also brought down the Chinese currency, the yuan, at .15 against the dollar over the weekend.
The news of such thinking and planning by the Trump administration at the White House comes at a time when the trade representatives of both the countries are reported to be meeting for negotiations on trade in Washington on October 10. Both the countries – the two largest economies of the world, have been locked in an acrimonious trade war for more than a year and have, as a part of the trade spat, imposed tit for tat tariffs on each other’s goods worth billions of dollars. The trade war has significantly impacted the global financial markets and has slowed down global trade with rising concerns about a worldwide economic recession hitting soon.
Major indexes that are pegged on billions of dollars in investment would be affected by delisting of Chinese companies from US stock exchanges. At it would also come a blow to the efforts of the Chinese government to opening up more of its economy and market to foreign companies.
There has been no comment made on the issue form the White House.
“One critical quality of our capital markets is that we provide non-discriminatory and fair access to all eligible companies. The statutory obligation of all U.S. equity exchanges to do so creates a vibrant market that provides diverse investment opportunities for U.S. investors,” said Nasdaq in a statement responding to  the new reports of delisting of Chinese companies from American stock exchanges.

Christopher J. Mitchell

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