Biden Adds to “No Trade’ List

Biden Adds to “No Trade’ List
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​President Biden expanded the scope of companies that were covered under Executive Order 13974 (1/13/21) which was an amendment to the original Trump EO 13959 which prohibited the trading of securities in a number of Chinese companies alleged to have ties with the Chinese military.  The extension increased the number of entities on the list from 31 to 59 and included two Huawei entities that had not been in the original or updated EO.  These companies (Proven Glory Capital & Proven Honour Capital) have been used by Huawei to raise capital in the past.  While the expanded list and its official move to administration under the US Department of the Treasury gives it more legal power, it does not take effect until August 2, leaving time for additional lawsuits to be filed.  As we noted recently, smartphone producer Xiaomi (1810.HK) was able to sue the US government and have itself removed from the list, although such successful court challenges have been few, and will likely become even more difficult in the future.
Despite the ongoing trade negotiations between the US and China, the new administration has continued to take a hard stance toward Chinese companies that it believes either work with or sell to the Chinese military, and US securities exchanges have gone from questioning the ban on legal grounds to potentially implementing the rules.  Whether the newly added companies or the entire list itself is a pawn in the trade chess game between the two countries remains to be seen, but it will certainly have an effect on the ability of the companies on the list to access US capital.