Trump administration reportedly considering limits on pension investments in Chinese stocks

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US President Donald Trump speaks to the press as he departs the White House in Washington, DC, for his annual visit to Walter Reed National Military Medical Center, on October 4, 2019.

Andrew Caballero-Reynolds | AFP | Getty Images

The White House is reportedly discussing blocking government pension funds from investing in China, Bloomberg News reported on Tuesday.

This comes after the White House denied reports it is considering ways to limit U.S. investments in China. White House adviser Peter Navarro told CNBC the reports were “fake news;” however, people familiar with the matter told Bloomberg News that Trump officials met last week about the deliberations.

In addition to curbing government pension investments, the administration is now honing in on how to limit stock index providers from including Chinese stocks. National Economic Council director Larry Kudlow held a policy meeting last week with officials from the National Security Council and the Treasury Department, reports said.

Bloomberg News first reported last month that Trump administration officials are weighing delisting Chinese companies from American stock exchanges and preventing U.S. government pension funds from investing in the Chinese market. The Treasury department also denied the reports from Bloomberg.

CNBC also reported the White House is weighing some curbs on U.S. investments in China and even considering possibly block all U.S. financial investment in Chinese companies. Restricting investments in Chinese entities would be meant to protect U.S. investors from excessive risk due to lack of regulatory supervision in China, the source said.

Trade talks between the world’s two largest economies are set to resume on Thursday. Principle level officials will meet in Washington to discuss a trade deal after both countries slapped billions of dollars of tariffs on each other’s goods. The South China Morning Post reported China is toning down its expectations ahead of trade negotiations with the United States.

Stock futures fell on Tuesday an investors optimism about a trade negotiation dimmed and this report seemed to play a part in knocking stock values. The Dow Jones Industrial Average futures indicated a drop of more 205 points at the open. S&P 500 and Nasdaq 100 futures also pointed to big losses.

Shares of Chinese companies took a leg lower on Tuesday on the news. Alibaba shares slipped 2.5% in extended trading, while Baidu and JD.com both fell more than 2%. 

The yen weakened 0.4% against the dollar. 

— Read the full Bloomberg News story here.

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