The Chinese electronics manufacturer Xiaomi, the third largest smartphone maker in the world and the major home appliance maker, disappears from FTSE Russell’s international stock market index. The company behind many leading stock market indices says it has to take this step because of an earlier decree by former US president Donald Trump.
The Trump government blacklisted Xiaomi, along with a group of other Chinese companies, just before Joe Biden took office. The company is said to have ties to the Chinese army, although Xiaomi firmly denies this. The intervention prohibited Americans from owning shares in the company.
FTSE Russel is now forced to remove Xiaomi, which is listed in Hong Kong, from the FTSE Global All Cap and FTSE Global China A Inclusion indices on 12 March. This is a sensitive blow to the company. Many institutional investors and passive investment funds hold exactly the shares that are included in these indicators. With Xiaomi disappearing from it, many pieces of the company may be sold.
Xiaomi is also suing the US government for the blacklisting. According to the company, it is unconstitutional and harmful. This makes it more difficult for the company to get capital to grow, argues Xiaomi.