The American authorities are considering completing the list of Chinese companies to be removed from Wall Street. This time, two digital giants are targeted: Tencent and Alibaba. A decision that must be carefully considered, because their market capitalization is $ 1.3 trillion.
The American stock market: a new protectionist playground
For several weeks, the United States has placed a sword of Damocles over a few dozen Chinese companies. Continuing its struggle to kick out of the country any symbol of Chinese economic power, the decision was taken to ban 35 Middle Empire companies from the New York Stock Exchange (NYSE). Among them are the main telecom operators China Mobile, China Telecom, and China Unicom Hong Kong. Other companies present in strategic sectors such as microprocessors, aerospace, or IT, were targeted.
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Trump signs new executive order to ban eight Chinese apps
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Faced with the amount of capital committed, the NYSE ended up backtracking on the withdrawal of the three operators. Before, once again, to reverse their decision and confirm the deletion of their titles from the lists. A twist that follows “new specific directives” emanating directly from the Department of the Treasury of the United States.
In China, the government has obviously expressed its displeasure, citing the possibility that the United States will lose its luster in international financial markets. “I am sure that all countries, not just China, are monitoring what the United States plans to do, which will determine whether they can be considered a reliable or trustworthy partner to cooperate,” said one. spokesperson for the Chinese Foreign Ministry following the announcement.
Two new scapegoats
Regarding the withdrawal of Tencent and Alibaba, the time is for the moment to reflect. These companies have been in the market for so long, and their stock has been favored by a number of US mutual funds, or investors. Even if they are not followed by the major Wall Street indices, which favor American companies, Alibaba and Tencent remain heavyweights.
The Treasury Department must therefore carefully consider the ramifications of the two securities in the US financial market. Indeed, a forced sale, too important in value or in volume, could shake the market.
After launching a cabal against Huawei, Trump wants to end his mandate by rubbing shoulders with two Chinese digital giants. Earlier this month, the US government began a 45-day countdown at the end of which eight Chinese apps will be banned. Half of them are owned by Alibaba and Tencent, and they are mainly payment services: Alipay, QQ Wallet, WeChat Pay.
If President Trump’s year 2020 was marked by his many protectionist measures, this trend persists until the end of his mandate. It will now be a question of what Joe Biden will do with the relics left by the outgoing president. On the one hand, the US stock market could be shaken by the exit of two behemoths. On the other hand, the ban on eight applications must come into force ten days after its inauguration. Two opportunities for the new president to seize in order to set the tone for his international economic policy.
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