JPMorgan Chase’s bond index, which is widely tracked by the market, will exclude new bonds issued by Chinese companies that were placed on the Trump administration’s sanctions list last week.

JPMorgan Chase wrote in a report to customers on Tuesday that this decision applies to new bond issuance, renewal and reopening of bonds by affected issuers. Existing bonds of sanctioned companies will remain in the index for the time being, but JPMorgan Chase will reassess their eligibility once the relevant impact becomes clearer. When Bloomberg asked JPMorgan Chase for comment on Wednesday, the bank declined to comment further.

Trump signed an executive order on November 12 to prohibit US investment in companies deemed to be owned or controlled by the Chinese military, marking the White House’s renewed pressure on China for so-called abusive business practices. JPMorgan Chase’s move highlights that the impact of such sanctions may extend beyond the United States, prompting index-tracking investors around the world to avoid new bonds issued by sanctioned companies, or even reduce their holdings of existing bonds.

After Trump’s executive order was issued, the spread on some US dollar bonds of China National Chemical Corporation widened to the highest level since May. It narrowed on Wednesday. The news that existing bonds will remain in the JPMorgan Chase Index has brought some relief. .

In late August, the U.S. Department of Defense added 11 Chinese companies that are said to be associated with the Chinese military to the list of “military enterprises”, including China National Chemical Corporation. The JPMorgan Chase report said that the full list includes 16 issuers and their subsidiaries.

Read more: Trump reissues an executive order prohibiting investment in companies controlled by the Chinese military

JPMorgan Chase stated that its bond index contains 72 securities related to sanctioned companies, adding that the JACI index is expected to be most severely affected because sanctioned companies collectively account for 3.7% of the weight.

JPMorgan Chase stated that it is unclear whether international broker-dealers will be considered Americans and whether they will be able to trade the securities of sanctioned companies from January 11, even if it is for investors to dispose of the securities they hold. . The bank pointed out that the liquidity of sanctioned corporate bonds could be “substantially impaired.”

Bloomberg LLP, the parent company of Bloomberg News, also compiles a bond index that includes Chinese issuers.