Asian markets tumble, China tech hit after Huawei arrest
HONG KONG: Shares across Asia plunged yesterday, with technology firms in Hong Kong and Shanghai battered after the arrest of a top executive at Chinese telecoms giant Huawei that has also fuelled fears about the recent China-US trade deal.
As Donald Trump and Xi Jinping’s tariffs ceasefire last weekend – which sparked a one-day rally – fades to a distant memory, investors are back in selling mood as they fret over a range of issues including the state of the world economy, oil prices and Brexit.
The chances of trade peace between the US and China took a blow Thursday as it emerged Huawei chief financial officer Meng Wanzhou had been held in Canada and faces extradition to the United States over alleged Iran sanctions breaches by the firm.
Meng is also the daughter of company founder Ren Zhengfei, a former Chinese People’s Liberation Army engineer.
The company had been investigated by US intelligence, who deemed it a national security threat.
However, the arrest drew a swift response from China, which said it “firmly opposes and strongly protests” the move, adding it had urged Canada and the US to “immediately correct the wrongdoing”.
The news sent shudders through Hong Kong and Shanghai markets, where tech firms were hammered.
Hong Kong-listed ZTE, which was subject to a US banning order earlier his year over security fears before that was reduced to a massive fine, was 5.9 per cent down.
Market heavyweight Tencent was 3.6 per cent lower and AAC Technologies was six per cent off.
Sunny Optical, which supplies Huawei, plunged 6.2 per cent.
And in Shanghai, Wingtech Technology was down by its daily limit of 10 per cent, Raisecome Technology sank 3.8 per cent and Fujian Raynen Technology lost 3.2 per cent.
Taipei-listed tech firms were also hurt.
Taiwan Semiconductor Manufacturing Company lost 2.4 per cent and Hong Hai Precision was 3.2 per cent lower.
There were also losses for other tech firms in the region, with Sony down three per cent in Tokyo and Samsung almost two per cent lower.
The sector was already under pressure from concerns about future growth and following a surge in recent years.
“Thisheadline is quitesignificant as the US government is attempting to persuade allies to stop using Huawei equipment due to security fears,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
“Recall that over 100 Chinese companies traded limit down (last month) when news broke the US urged allies to blacklist Huawei?” Broader markets, which have also been hit by worries that the US economy is showing signs of slowing, were well down.
Hong Kong shed 2.6 per cent by lunch while Shanghai lost 1.3 per cent and Tokyo slipped 2.5 per cent.
Taipei was 2.2 per cent off, while Manila and Jakarta also dived.
Sydney fell 0.5 per cent, while Singapore and Seoul each gave up 1.3 per cent.
“This is what you call playing hard ball,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong.
“China is already asking for her release, as can be expected, but if the charges are serious, don’t expect the US to blink.” On foreign exchanges the flight to safehaven assets sent high-yielding and emerging market currencies sharply lower, with the Australian dollar and South African rand one per cent off, South Korea’s won 0.5 per cent lower and the Indonesian rupiah 0.7 per cent lower.
The greenback was well down against the yen, which is a go-to unit in times of turmoil.
The pound is struggling as Britain lurches towards a no-deal Brexit with Prime Minister Theresa May facing defeat in her attempts to push through parliament a controversial agreement with the EU. — AFP