U.S. financial firms facilitated investments worth billions of dollars in index funds that included blacklisted Chinese companies, according to a bipartisan House Committee investigation that called for legislation aimed at restricting investment in those Chinese entities. U.S. index providers and asset managers channeled $6.5 billion last year to 63 Chinese companies flagged by the U.S.
In particular, the Select Committee said it focused on two companies — the world's foremost index provider, MSCI, and the world's largest asset manager, BlackRock — and also canvassed the broader financial industry. It concluded that MSCI indexes alone channeled $3.7 billion and BlackRock invested at least $1.9 billion in these red-flagged entities.
The probe comes as ties between the U.S. and China, the world's two largest economies, have been strained in recent years due to issues including Taiwan, the origins of the COVID-19 pandemic, allegations of spying, human rights issues and trade tariffs. "Despite fully cooperating with the Committee for more than eight months, its report includes misleading assertions about index funds, including that they are 'funneling billions of dollars' to these entities," the spokesperson added.
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