MSCI culls ZTE from list of firms to add to gauge - Taipei Times
Fri, Jun 01, 2018 - Page 11 News List

MSCI culls ZTE from list of firms to add to gauge

Bloomberg

ZTE Corp (中興通訊), the Chinese telecommunications equipment manufacturer at the heart of a trade spat with the US, has had its yuan-denominated shares cut from a list being added to MSCI Inc’s global benchmarks.

Shenzhen, China-based ZTE was one of five companies removed because their shares are suspended from trading, MSCI said in a statement on Wednesday evening.

Trading in ZTE has been halted since April 17 after the company was banned from doing business with US suppliers as punishment for allegedly lying to US officials in a sanctions case.

Its Hong Kong-listed shares, also suspended since April, are already in MSCI gauges.

MSCI is to include more than 200 Chinese securities in its indices from today.

Like ZTE, China Railway Group Ltd (中國中鐵), whose H-shares are in the MSCI China Index, has been removed from the list, along with Beijing Orient Landscape & Environment Co (東方園林), China Hainan Rubber Industry Group Co (海南橡膠) and Shanxi Taigang Stainless Steel Co (太原鋼鐵).

Trading halts happen more frequently in China than elsewhere — the value of frozen shares on the country’s exchanges exceeded US$456 billion in March, 3,150 times more than in the US.

The propensity to suspend trading was one of the reasons MSCI had previously rejected China-listed shares.

The index compiler’s next review is scheduled for Aug. 13.

UNCERTAIN FUTURE

ZTE on Wednesday said that trading in its shares would remain suspended for now.

US President Donald Trump last week said that ZTE could remain in business if it paid a US$1.3 billion fine, changed its management and provided security guarantees, although the proposal faces opposition in US Congress.

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