Donald Trump’s dislike of China is somewhat hard to fathom out, although it would fit in with the occasionally touted suggestion that he is a covert actor for Russian interests. Whatever his motivation, his latest edict that US stock exchanges cannot list some large Chinese state controlled businesses has caused a headache for investment houses that offer ETFs or other vehicles tracking indices in which those shares are listed.
Because the Chinese shares will leave the US indices, all trackers will have to sell out their holdings or have tracking error, or regulatory problems. Even vehicles tracking other indices that contain the Chinese companies banned from US listings but which are not per se blocked from owning the shares will see consequences because of the mass enforced sell offs. Liquidity issues may crop up too.
Another example of Trump’s anti-China policy actually damaging US interests – the biggest issuers of passive funds are Vanguard and BlackRock, both US based.
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