Unexpected Decision from MSCI: Delisting Chinese Companies

Unexpected decision from MSCI: delisting Chinese companies. According to the latest information, MSCI is preparing to exclude three Chinese telecommunications companies from the indices. The decision caused China Unicom's shares to depreciate by almost 11 percent in Hong Kong markets. Shares of China Mobile and China Telecom lost around 10 percent. MSCI decided to exclude China's three largest telecommunications companies from the index on the last trading day of the week. Global funds only have one day to correct billions of dollars in passive investments. Shares of China Mobile, China Uciom and China Telecom were mixed this week as it was not fully understood whether they were included in the US investment ban. In addition, the total volume of these stocks had increased to almost 18 times the daily trading volume in the last three months with the balancing efforts. Passive investors, market makers, and portfolio managers usually have a few weeks to make significant changes in indices, but they will have only one day to wrap everything up. Following the decision, China Unicom's shares lost about 11 percent in Hong Kong transactions, while the shares of China Mobile and China Telecom fell around 10 percent. Commenting on the issue, Everbright Asset Management Strategist Kenny Wen said, “This decision change created a lot of confusion. Naturally, this reflected negatively. Investors were given little time to divest the shares.”