S&P Dow Jones Indices to Approve Xiaomi Index Re-inclusion after US Investment Ban Halted
S & P Dow Jones Indices (S&P DJI) announced on Monday that Xiaomi is eligible to be included on indices again after it won a court ruling which temporarily lifted a US government investment ban in the Chinese smartphone maker. The ban is based on the company’s alleged ties with the Chinese military.
S&P DJI will review Xiaomi’s securities for eligibility during their scheduled rebalancing in April and June, the index provider said in a statement.
Under the Trump administration in mid-January, the Department of Defense (DoD) labeled Xiaomi as one of several “Communist Chinese military companies”. The designation bars American entities from investing in the world’s third-largest smartphone vendor. It also establishes an ultimatum by which existing investors are required to have sold their holdings.
Xiaomi filed a lawsuit in the US District Court of Columbia, seeking to overturn the blacklisting.
After the ban was announced, the company was deleted from global benchmark indices, including S&P DJI and FTSE Russell Indexes.
Earlier this month, US District Judge Rudolph Contreras ordered a halt to the ban, citing DoD’s failure to provide persuasive evidence which could prove Xiaomi’s affiliations with the military. “The court is somewhat skeptical that weighty national security interests are actually implicated here,” Contreras wrote.
Luokung Technology Corp, another Chinese firm placed by the DoD on the blacklist, will not be added to indices prior to May 8, S&P DJI said on Monday. Effective from May 8, the Beijing-based provider of map and cloud software will become ineligible for indices.
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The firm also denied being owned or controlled by any entity tied to the Chinese military and has sued the US government, pursuing removal of the investment ban.
Founded in 2010 by billionaire entrepreneur Lei Jun, Xiaomi focuses on developing smartphones and smart home devices connected by an Internet of Things platform. The firm’s share of the global smartphone market rose to 11.2% in the fourth quarter of last year, trailing only Apple and Samsung.