Trump tightens ban on Chinese oil company shares

US President Donald Trump has tightened restrictions on investment in Chinese state-owned CNOOC and other "military linked" Chinese companies, just days before he leaves office.

It will be illegal for any US investors to hold equities or securities in any "Chinese military company" after 11 November this year, according to an executive order issued late yesterday. A previous order, issued late last year, only restricted the purchase of new shares in the companies.

The US has identified CNOOC, state-controlled refiners Sinochem, ChemChina and Norinco and 31 other major Chinese engineering, telecommunications and technology firms as having ties to the military. The stated rationale for the list is a determination under a previously unused 1998 US law that "communist Chinese military companies" should be cut off from US financial and capital markets to prevent the People's Liberation Army access to advanced technologies and expertise.

US index provider S&P Dow Jones Indices said late yesterday that it will remove CNOOC's American Depository Receipts and H-shares from its indexes because of the US sanctions, effective 1 February.

Shares in CNOOC's Hong Kong-listed arm slumped by as much as 14pc on 30 November, when reports of the investment ban first emerged, and hit a 12-year low of HK$6.55/share (84¢/share) on 10 December. Its share price has recovered since then and rose by 6.2pc today to hit a 1½-month high of HK$8.18/share.

The executive order is the latest move by Trump administration officials to add to pressure on China ahead of the inauguration of president-elect Joe Biden next week. Secretary of state Mike Pompeo on 9 January lifted restrictions on US government contacts with Taiwanese officials, and national security advisor Robert O'Brien this week declassified a major strategy document, the US Strategic Framework for the Indo-Pacific, which focuses on preventing China from establishing "new, illiberal spheres of influence" and on countering Beijing's influence in the region.

By Kevin Foster