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“People have a hard time understanding exactly where the lines are (and) what they can and cannot do,” said Maura Rezendes, a partner at Allen & Overy who previously worked at Ofac. “Even with the cover of (further guidance) or the U.S. government saying we didn’t mean to prohibit those kinds of activities, you’ll just see people refuse to do it. That will cause gridlock in the market.”
Money managers said the mandate could prompt other Chinese companies to de-list from American exchanges. Since 2000, Chinese companies have raised more than US$140 billion through share sales on U.S. shores, according to data provider Refinitiv. It is unclear whether President-elect Joe Biden will reverse the policies Trump’s team has enacted in its final days in office.
People have a hard time understanding exactly where the lines are (and) what they can and cannot do
Maura Rezendes, partner, Allen & Overy
“This is a rivalry that is likely to be with us regardless of the change in the U.S. administration,” said Morgan Harting, a portfolio manager at AllianceBernstein. “The specific policy choices or tactics will surely evolve…but I wouldn’t expect there to suddenly be much warmer relations.”
The executive order has already prompted mutual and exchange traded funds to cut stakes in Chinese groups and for investors to analyze what derivatives in their portfolio might prove problematic. U.S. shares of China Mobile and China Telecom have fallen nearly 20 per cent since Trump signed the order.
“You are essentially weaponizing the financial markets,” Jack Janasiewicz, a portfolio manager at Natixis Investment Managers, warned.
Additional reporting by Hudson Lockett, Michael Mackenzie
© 2021 The Financial Times Ltd
