Ar­rest of Huawei CFO sparks global stock mar­ket rout

Worst day of trad­ing for FTSE 100 since Bri­tain voted to leave EU as £56bn is wiped off UK com­pa­nies

The Daily Telegraph - Business - - Front Page - By La­Toya Hard­ing and Ben Ri­ley-Smith in Wash­ing­ton

THE ar­rest of a se­nior Huawei ex­ec­u­tive has sparked a huge sell off in stock mar­kets around the world as wor­ries about China’s re­la­tion­ship with the US mount.

Meng Wanzhou, the daugh­ter of the Chi­nese telecom­mu­ni­ca­tions gi­ant’s founder Ren Zhengfei, was ar­rested in Canada on Sun­day on al­le­ga­tions of breach­ing US sanc­tions against Iran and for cy­ber es­pi­onage. News of her ar­rest only sur­faced yes­ter­day.

The Chi­nese gov­ern­ment has de­manded the re­lease of Ms Wanzhou, whom the US was seek­ing to ex­tra­dite, ac­cord­ing to Cana­dian of­fi­cials. The ar­rest reignited con­cern that the trade cease­fire be­tween Amer­ica and China, which had only been bro­kered at the G20 sum­mit in Ar­gentina last week­end, would de­te­ri­o­rate, send­ing stocks scream­ing into the red.

Con­nor Camp­bell, a fi­nan­cial an­a­lyst at SpreadEx, said: “The Huawei ar­rest ap­pears to be the straw that broke the camel’s back.” The news first hit Asian mar­kets, with the Hang Seng in­dex drop­ping 2.5pc to 26,156 and the tech­heavy Shen­zhen Com­pos­ite in­dex fall­ing 2.2pc to 1,351.

The UK’s bench­mark FTSE 100 in­dex took its lead from Asia, suf­fer­ing its worst day of trad­ing since Bri­tain voted to leave the EU, clos­ing down 3.2pc at a two-year low of 6,704, and wip­ing around £56bn off the value of the coun­try’s largest listed com­pa­nies. The FTSE 250 tum­bled 2.8pc to 17,753.

A sim­i­lar scene played out across Europe. The Dax in Ger­many, one of the big­gest ex­porters to China, fell 3.5pc, putting the in­dex into a bear mar­ket as it has now lost a fifth of the value since its last high. In the US, the Dow Jones In­dus­trial Av­er­age fell 3.9pc and the S&P 500 and the Nas­daq both tum­bled more than 2pc be­fore re­cov­er­ing some of their losses.

Tech­nol­ogy and au­to­mo­tive stocks were among the hard­est hit, as well as min­ing and oil com­pa­nies, set­ting mar­kets up for a tur­bu­lent end to the year. The ar­rest ap­pears to meet two for­eign pol­icy aims of the Trump ad­min­is­tra­tion – en­forc­ing a hard-hit­ting sanc­tions regime against Iran and con­fronting Chi­nese busi­nesses sus­pected of cor­po­rate es­pi­onage.

Mr Trump and his of­fi­cials have been work­ing hard to con­vince other sig­na­to­ries to the 2015 Iran nu­clear deal to pull out and have been threat­en­ing to pun­ish busi­nesses that flout the sanc­tions they reap­plied this year.

The US pres­i­dent has also railed against Chi­nese com­pa­nies ac­cused of steal­ing con­fi­den­tial in­for­ma­tion from Amer­i­can firms, while his in­tel­li­gence chiefs have raised fears that Huawei could pose a se­cu­rity risk given its close ties to the Chi­nese gov­ern­ment.

The ar­rest risks es­ca­lat­ing ten­sions be­tween Mr Trump and Xi Jin­ping, the Chi­nese pres­i­dent, after they ap­peared to have agreed a 90-day truce in their trade war to al­low for fur­ther ne­go­ti­a­tions. The ex­act terms of the agree­ment re­main un­clear.

The White House’s in­volve­ment in the ar­rest re­quest re­mains un­clear. NPR, the US broad­caster, re­ported that John Bolton, the White House na­tional se­cu­rity ad­viser, knew about the ar­rest in ad­vance.

Ben Sasse, the Repub­li­can sen­a­tor for Ne­braska, praised the move and said that it was “for break­ing US sanc­tions against Iran”.

Global mar­kets have re­acted dra­mat­i­cally to the ar­rest fear­ing it will dam­age re­la­tions be­tween the US and China

Meng Wanzhou, chief fi­nan­cial of­fi­cer for Huawei, was ar­rested in Canada and the US is press­ing for her ex­tra­di­tion

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