SMIC to be “shielded” again


SMIC to be "shielded" again
Late January 6, smic in the Hong Kong stock exchange announcement, said the company won the OTCQX market (OTC securities of financial Markets, USA) operators of the OTC Markets Group notice, in accordance with the relevant administrative commands and related regulatory guidelines, the company will from January 6 at the end of the deal was withdrawn from the OTCQX market, the company’s securities will no longer qualified quotations or trading on the OTC Link ATS. According to the announcement, after the delisting of SMIC ASDR shares (” ASDR shares “, ADS) from the New York Stock Exchange in 2019, the company’s ASDR shares will be traded on the OTCQX market, the financial market for over-the-counter securities in the United States.

The move follows FTSE Russell’s announcement on January 4 that three companies, including SMIC, would be removed from the FTSE Global Equity Index Series and the FTSE China A-share index from the start of trading on January 7.

Evacuated from OTCQX

SMIC was withdrawn from the US over-the-counter market this time. In connection with a previous US ban, SMIC was concerned that SMIC was listed by the US Department of Defense as one of China’s military-related enterprises, according to a notice issued by SMIC on December 4, 2020. After the company is included in the list of military-related enterprises in China, Americans will be restricted from trading in securities issued by SMIC and related derivatives: Americans will not be allowed to buy securities of SMIC for 60 days from December 4, 2020 Beijing time; After 365 days, Americans may not trade in corporate securities. For specific regulatory restrictions, refer to the Executive Order issued by the President of the United States on November 12, 2020.

On the evening of December 20, SMIC also announced that the US Department of Commerce had placed SMIC and some of its subsidiaries and joint-stock companies on the “Entity List” for the purpose of protecting US national security and diplomatic interests. After the company is included in the “Entity List”, the supplier shall obtain an export license from the U.S. Department of Commerce for the products or technologies that are subject to the Export Control Regulations of the United States, in accordance with the provisions of the relevant U.S. laws and regulations. The company said the issue had a significant adverse impact on research and development of advanced processes up to 10nm and capacity building.

In the United States after the “shield” behavior, the capital market also set off bursts of ripples. FTSE Russell, wholly owned by the London Stock Exchange Group (LSE), announced on Thursday that it would remove the shares of three companies, including SMIC, from the FTSE Global Equity Index Series and the FTSE China A-share Index starting from the start of trading on January 7. Other index providers, such as the New York Stock Exchange, MSCI, S&P Dow Jones Indexes and Nasdaq, also began removing some Chinese companies from their indices following the president’s executive order.

Hong Kong stocks are up and down

FTSE Russell said it had removed some Chinese companies from the Global Index following the Trump administration’s executive order banning investments in “Chinese companies with military affiliations”. The decision was made in accordance with the sanctions imposed by the US to restrict investment.

FTSE Russell also said it would drop SMIC from the FTSE China 50 index and Hykvision from the FTSE China A50. Last month, FTSE Russell dropped eight Chinese companies, including Hikvision, China Railway Construction and China Aerospace Satellite, from its global indices.

FTSE Russell explained that it acted on the basis of feedback from users of the index and other stakeholders.

From the perspective of capital market performance, relative to the smooth performance of A-shares, recent SMIC stocks in Hong Kong have been ups and downs. On January 6, SMIC’s Hong Kong shares plunged in the afternoon, closing down nearly 10 per cent. On January 7, the Hong Kong shares of SMIC recovered the lost ground immediately and rose by more than 19% in the afternoon to close at HK $22, up 12.94%. The latest A+H total market value exceeded 220 billion.


Notably, in deleting eight Chinese companies last month, FTSE Russell said it would consider reintroducing them to its standard FTSE Russell index 12 months from the date of the lifting of sanctions. It also means that, assuming sanctions are lifted by the end of March next year, FTSE Russell will reconsider the inclusion of these companies in the FTSE World Equity Index Series at its semi-annual review in September 2022.

Although the company is currently facing many uncertain factors, still did not stop some institutions optimistic feeling. Cicc recently published research thought, smic’s future developing mature technology, will good increase shareholder returns for a long time, at the same time the smic stock valuations relative huahong have 45% discount, the bank believes the next few months as the U.S. government approvals gradually clear, the company stock valuation is expected to improve, suggested that continuous attention.


article links:SMIC to be "shielded" again

Reprint indicated source:Spark Global Limited information

1 Response

  1. Polly says:

    The US Department of Commerce added SMIC and some of its subsidiaries and joint-stock companies to its “Entities List” on the grounds of protecting US national security and diplomatic interests.

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