Potential US Investment Curbs Prompt Chinese Stock Losses

Shares of well-known Chinese companies, like Alibaba, JD.com and others, dropped sharply on Friday (Sept. 27) amid news that the United States might be curtailing Chinese investments, according to a report by CNBC.

The Trump administration is reportedly considering the potential blocking of all Chinese investments, in a move that it says will protect American consumers. However, no final decisions have been made.

Alibaba shares dipped 5 percent, and Baidu and JD.com shares also dropped. The iShares China Large-Cap ETF, which holds China Construction Bank and Tencent Holdings, dropped 1 percent as well.

The White House is reportedly considering delisting companies in China from stock exchanges and stopping pension funds from being invested in the country’s market.

The news affected the strength of China’s currency, which weakened to 7.15 against the American dollar after the news.

The two countries are scheduled to continue trade talks on Oct. 10, as both have been placing tariffs on goods on both sides. The delisting of Chinese companies would have a huge effect, affecting billions in major index investments. The moves come as China is attempting to increase access to foreigners for its markets.

Last month, it was reported that the ongoing trade war with China has negatively affected Apple shares. Apple could see tariffs affect annual earnings adversely, as President Trump’s tariffs are proposed at 10 percent on Chinese imports, Merrill Lynch said.

“Our ‘back of the envelope’ math suggests the impact [of the new tariffs] will be [a] roughly $0.50-$0.75 [annualized per share] hit to earnings with roughly $0.30-$0.50 from iPhones,” the brokerage said. Apple shares reacted poorly to the news, dropping 2.5 percent Friday, in a trend that has been ongoing since the trade war began.

The trade war, which has lasted for more than a year, has been disruptive to the global economy. Global supply chains and financial markets have all been affected.