Fri January, 2021, Age: 3 years
In a note to its clients, U.S. financial firm JPMorgan warned its clients that U.S. restrictions on certain Chinese companies could result in the sell off of $60 billion in bonds as U.S. citizens and firms are forced to exit their positions. The Trump administration issued an executive order in November that added 44 Chinese owned firms, that the U.S. Defense Department maintains has ties to China’s military, to a list that precludes U.S. companies or citizens investment. Only some of these companies have been pulled from indices and stock exchanges since then but were the Treasury Department to fully execute on the order, JPMorgan estimates that around “US$55-60 billion of bonds would be affected.” China has claimed that there is specious evidence connecting many of these firms to the Chinese military. One of the biggest Chinese firms with U.S. debt exposure is China National Chemical Corporation which has seen about $1 billion in forced selling since the E.O. and could see another $1.3 billion of “outflows from affected investors.”