The Biden Administration has said the U.S. is in competition with China and restricted the ability of American businesses to sell high-end chip tech to China.
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BEIJING — A ban on U.S. investment in Chinese tech could drive up market volatility — but some sectors may escape untouched, Bank of America analysts said.
The White House is reportedly considering an executive order to ban U.S. investment into high-end Chinese tech, such as artificial intelligence, quantum computing, 5G and advanced semiconductors, according to a Politico report last week.
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It’s unclear whether or when such a rule might take effect. The report indicated ongoing internal debate within the U.S. government.
“If there were a strict investment ban on US investors, it could create a significant supply of shares over the grace period and hence potential large volatility in the near term,” Bank of America’s Hong Kong-based research analysts said in a note Tuesday. “Potential long-term impact is less clear.”
“Though AI is quite prevalent in today’s online world, companies that don’t have a large business in external AI solutions [will] likely see a lower chance [of] being targeted by the U.S. side,” the analysts said.
“Online travel companies, pureplay game and music companies, online verticals in auto and real estate, niche eCommerce specialties, and logistics-focus eCommerce companies are some of the examples,” the Bank of America report said.
The analysts did not name specific stocks.
Chinese stocks have recently tried to rebound after a plunge in the last two years.
The country ended its stringent zero-Covid policy in December. In the second half of last year, the U.S. and China also reached an audit deal that significantly lowered the risk Chinese companies would have to delist from U.S. stock exchanges.
Some of the U.S.-listed Chinese stocks with the largest U.S. institutional investor ownership on a percentage basis included KFC operator
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