So she sold the investments to someone else. I fail to see how this makes any difference to who ever issued the bonds/stocks or what-ever.
It is a first step. If enough states will follow suit, foreign companies will have to make a choice between access to US capital markets or doing business with terrorist sponsoring nations.
If large US trusts start divesting themselves of particular investments, other investors will as well, and fewer US investors will purchase them. As more come on the market, the price will drop, sometimes like a rock. And as that happens, more people will sell their investments as their value drops, and that can snowball.
What happens next is really interesting. Foreign buyers will then purchase them, but at that much lower price, and even then, many overseas investors will think two or three times before touching them down the road.
Eventually, some of those companies could have their stock prices crash to the point where they get delisted. Others will change their ways to try to get their stock prices back up.
Economic warfare can get really nasty. If you have no money, it's difficult to wage regular war or even terrorism on a significant scale.
"I fail to see how this makes any difference to who ever issued the bonds/stocks or what-ever.
"
you are right in this part. where it may affect the issuer is in 1) rates required to find adequate capital from buyers of any new issue of bonds and 2) the issuer's ability to sell additional shares via whatever placement mechanism, both in the momentary market price of the issue and the buyer's anticipation of liquidity and whatever political risk the country carries.
problem is there are plenty of non-US-based funds that will buy such issues in the primary or third market once a value/price inefficiency gets sufficiently large.