Global investors are turning tentative on investing in some Chinese entities which were named in a U.S. government executive order.

Global Investors – MSCI

On Tuesday, MSCI said it would remove 10 Chinese securities from its indexes. The company is one of the largest stock index companies in the world. Moreover, this is effective at the close of businesses on January 5, 2021.

President Donald Trump’s Order

On November 12, President Donald Trump issued an order. Therefore, this order bans American companies and individuals from owning a share of Chinese companies that the White House says support China’s military.

Market Participants Anticipate Changes

“This itself is not economically earthshaking, but it is something that makes you take note because it was pretty quick how all this happened,” said James Early, CEO of investment research firm Stansberry China. “It’s not MSCI. It’s market participants driving this. … They’re doing this because the market is telling them they have to.”

Global Investors Speak Out

The decision was based on responses from more than 100 market participants worldwide. Moreover, they noted an “extensive presence” of U.S. financial entities in the investment processes of global investors that could dramatically slow down transactions in the affected stocks.

MSCI said in a release its decision was based on responses from more than 100 market participants worldwide, who noted the “extensive presence” of U.S. financial entities in the investment processes of global investors could significantly hinder transactions in the affected stocks.

MSCI plans to delete seven companies from its global investable market indexes. Those include chipmaker SMIC, video surveillance company Hikvision, railway manufacturers CRRC and China Railway Construction, supercomputer company Dawning Information Industry, infrastructure developer China Communication Construction and satellite manufacturer China Spacesat.

MSCI said subsidiaries and affiliates are not affect. Hong Kong and mainland Chinese listings do not need removals. They represent a very small fraction of a percent of the major MSCI indexes.