Today was marketably more active in the sphere of Geopolitics, with another story of an emerging market issuing more debt to cover COVID-related expenses. As the economic condition globally continues to deteriorate, I expect that we will see more of these stories appear along with more warnings from yours truly to please not buy them. Regardless I hope all of you have a good day and even better weekend!
US Government Forbids investment in 30 Chinese Companies Connected to Military and Surveillance
Late yesterday evening, President Trump issued an executive order banning investment in more than 30 Chinese companies with ties to the Chinese military and security apparatus. Many of the companies that were names operate in the telecoms, petrochemical, and surveillance equipment sector are listed on US exchanges. This executive order was signed to disincentives US investors, financial institutions, and pension funds from providing capital and dollars to Chinese corporates.
What makes this executive order very interesting is that it doesn't list the penalties or punishments inflicted on this executive order's violators. In its place, it gives the treasury department an open-ended mandate to enforce this executive order under the "Internation Emergency Economic Power Act," which offers a wide range of sanctions options on different levels of severity from sanctions on individuals to the nations banking system.
The use of such a wide mandate allows for several options for the treasury department:
- It gives Treasury to punish based on repeat offenders vs. first-timers.
- It allows for the... (More)