A possible US funding ban on Chinese language know-how may harm these sectors

The Biden administration said the US competes with China and restricts American companies’ ability to sell high-end chip technology to China.

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BEIJING — A ban on U.S. investment in Chinese tech could increase market volatility — but some sectors could be unaffected, Bank of America analysts said.

According to a Politico report last week, the White House is reportedly considering an executive order to ban US investments in high-end Chinese technologies such as artificial intelligence, quantum computing, 5G and advanced semiconductors.

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It is unclear if or when such a rule could come into effect. The report points to an ongoing internal debate within the US government.

“If there were a strict investment ban on U.S. investors, it could result in a significant supply of stocks during the grace period, potentially causing high volatility in the near term,” Hong Kong-based research analysts at Bank of America said in a Tuesday Communication. “Possible long-term effects are less clear.”

“Although AI is prevalent in today’s online world, companies that don’t have big business in external AI solutions have [will] probably see a smaller chance [of] being targeted by the US side,” the analysts said.

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“Online travel companies, pure-play games and music companies, online auto and real estate industries, niche e-commerce specialties and logistics-focused e-commerce companies are some of the examples,” the Bank of America report said America.

The analysts did not name specific shares.

Chinese stocks have recently tried to recover after falling for the past two years.

The country ended its strict zero-Covid policy in December. In the second half of last year, the US and China also agreed on an audit deal that significantly reduced the risk of Chinese companies being delisted from US stock exchanges.

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Among the US-listed Chinese stocks with the largest percentage of US institutional investors was operator KFC Yum Chinalive streaming company Location and pharmaceutical companies Zai Laboratoryaccording to a report by Morgan Stanley on January 25.

companies in the semiconductor industry Daqo New Energy had nearly 27% institutional ownership in the US, Morgan Stanley said.

The data showed Ali Baba had the largest institutional ownership in the US by dollar value, but accounted for only 8.2% of the shares.

In a separate report Monday, Morgan Stanley equity strategist Laura Wang indicated that the Biden administration has focused on targeting technology with ties to the Chinese military.

She noted signs of stabilization in US-China relations, including US Secretary of State Antony Blinken’s planned visit to Beijing in the coming days and the possibility that Chinese President Xi Jinping will meet the US during the Asia-Pacific Economic Cooperation Summit visited. scheduled to take place in San Francisco in November.

The White House and the Chinese Foreign Ministry did not immediately respond to a request for comment on the Politico report.

– CNBC’s Michael Bloom contributed to this report.

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