Caixin
Jan 11, 2021 02:49 PM
FINANCE

Goldman, JPMorgan and Morgan Stanley to Delist 500 Structured Products in Hong Kong

People in protective masks walk past a sign for Hong Kong Exchanges & Clearing in Hong Kong on Aug. 19.
People in protective masks walk past a sign for Hong Kong Exchanges & Clearing in Hong Kong on Aug. 19.

(Bloomberg) — Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. will delist 500 structured products in Hong Kong, adding to the fallout from a U.S. ban on investments in companies linked to China’s military.

The products include warrants and callable bull/bear contracts on Hong Kong’s benchmark Hang Seng Index, the Hang Seng China Enterprises Index and China Mobile Ltd., according to filings to Hong Kong Exchanges and Clearing Ltd. The city is the world’s largest structured product market with more than 12,000 listed products, HKEX figures show.

Separately, the $14 billion Tracker Fund of Hong Kong said it would refrain from making new investments in companies covered by the ban, adding that the fund is no longer “appropriate” for U.S. investors. Managed by State Street Global Advisors Asia Ltd., the tracker fund is Hong Kong’s most actively traded ETF.

Investors have been scrambling for more clarity on how regulators, exchanges and financial intermediaries will implement the vaguely worded executive order issued by Donald Trump in the waning days of his administration. The New York Stock Exchange said last week it will delist China Mobile and two other Chinese telecom companies. MSCI Inc. deleted the stocks from its global benchmark indexes on Friday, triggering a rush to sell that pushed volume in the stocks to historic highs and drove China Mobile’s share price to a 14-year low.

For banks, index compilers and money managers, the executive order has added to the challenges of navigating tensions between Washington and Beijing that have increasingly entered the financial sphere. China issued new rules on Saturday to protect its firms from “unjustified” foreign laws that will allow Chinese courts to punish global companies for complying with foreign restrictions.

Hong Kong’s exchange said it’s working closely with banks to ensure orderly delistings. “We do not believe this will have a material adverse impact on Hong Kong’s structured products market,” the exchange said in a statement Sunday. The city’s securities regulator said it has also been in close dialogue with the affected issuers and has reminded them to carefully assess the impact of the U.S. sanctions on their products.

Contact editor Yang Ge (geyang@caixin.com)

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