S&P Dow Jones Indices (S&P DJI) said Thursday it would remove Chinese companies from its equities and bond indices after U.S. President Donald Trump accused the companies of having ties to the Chinese military. 

S&P DJI said it would remove 10 companies, including surveillance camera maker Hikvision and major chipmaker SMIC, from all equity indexes prior to the market open on December 21. The company said it will also remove securities issued by 18 Chinese companies from its fixed income indices before January 1. 

It noted that the move "may impact the ability of market participants to replicate S&P DJI Equity and Fixed Income Indices containing securities affected by the order." It added the decision "only includes fixed income securities issued by the entities explicitly named in the executive order, not any affiliated company," adding it will continue to "monitor for any updates to the list of named entities, further clarifications on the scope of the executive order as it pertains to affiliates, and any other relevant matter."

Just several days before, another index provider FTSE Russell decided to remove eight Chinese companies from its family of global stock indices from December 21, and China responded by saying Chinese firms' funding will not be affected by the delisting.

The FTSE's move is "clearly influenced by the relevant U.S. executive order" and China firmly opposes the wanton suppression of Chinese companies by the United States, Hua Chunying, spokeswoman for the Foreign Ministry said Monday at a regular press conference.

"What the U.S. has done gravely violates market competition principles and international trade rules it always claims to champion, and will eventually damage investors' interests as well as its own national interests and image," Hua said.

"China's capital market enjoys greater openness day by day, making it easier for international investors to choose and buy in stocks of Chinese enterprises. Being excluded from some indexes will not impair these enterprises' ability to attract and receive investment from international investors," the spokesperson added.

The delistings came after outgoing U.S. President Trump unveiled an executive order in November to deter U.S. investment firms, pension funds and others from buying shares of Chinese companies designated by the U.S. Defense Department as backed by the Chinese military starting January 11 next year.

Another four additional companies, including SMIC, China's oil giant China National Offshore Oil Corp (CNOOC), China Construction Technology Co., and China International Engineering Consulting Corp., were designated later, bringing the total number of Chinese companies blacklisted to 35.

A Hikvision spokesperson said recently "we were bitter against the move to put Hikvision on this list back in June, in that we have accentuated time and again that Hikvision is anything but a 'Chinese military company'." 

SMIC stated that there was no major adverse impact from its addition to the list and reiterated that the company is an independent global enterprise with investors, customers and other stakeholders all over the world.

"We have all the way through adhered to lawful compliance and operation. Our services and products were never remotely close to any military affairs, only for civilian and commercial purposes. We strongly oppose the decision of the U.S. Department of Defense."

(Cover via CFP)