U.S. Listed Chinese Shares Take Heat

U.S. listed shares of Alibaba, Baidu, and JD.com were under pressure on Tuesday as investors got news of more conflict between the U.S. and China on the trade war front.

Chinese tech giant Alibaba shares fell 3.8%, while search engine Baidu was down 1.9%, and eCommerce company JC.com lost 3.9%.

The drop in the shares came as the U.S. fired its latest salvo in the trade war with China as the U.S. Commerce Department announced they were blacklisting 28 different Chinese companies. Of further concern to investors in the U.S. listed Chinese shares were further rumours of the White House considering to limit Chinese stock holdings in U.S. government pension funds.

That’s just a part of the White House discussions on possible restrictions on portfolio flows, not only within the U.S. but also into Chinese funds. The news comes just a week after such reports were labelled as “fake news” by White House adviser Peter Navarro.

The largest issue under consideration that would impact Chinese shares listed in the U.S. is the 2017 decision by the Federal Retirement Thrift Investment Board to have its international fund offering mirror the MSCI All Country World Index by mid-2020. That decision could be reversed, but the board meets again on October 21, making this particularly time-sensitive.

China hawks from outside the government and some U.S. lawmakers have been pushing the board to reverse the decision on the grounds that Americans are harmed by channelling money into Chinese firms, some of which are at the centre of U.S. security concerns.

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