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Asia: Markets tumble, China tech hit after Huawei arrest
[HONG KONG] Shares across Asia plunged on Thursday, 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 almost five per cent down. Market heavyweight Tencent was two percent lower and AAC Technologies was five percent off.
And in Shanghai, Wingtech Technology was four percent down, Raisecome Technology sank 2.8 per cent and Fujian Raynen Technology lost 2.6 per cent.
Taipei-listed tech firms were also hurt. Taiwan Semiconductor Manufacturing Company lost 2.2 per cent and Hong Hai Precision was 2.7 per cent lower.
There were also losses for other tech firms in the region, with Sony down three percent in Tokyo and Samsung almost two percent lower. The sector was already under pressure from concerns about future growth and following a surge in recent years.
"This headline is quite significant 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?"
On broader markets Hong Kong was down more than two percent while Shanghai lost more than one percent and Tokyo shed 1.8 per cent by the break. Taipei was two percent off, while Manila and Jakarta also took a hit.
Sydney fell 0.5 per cent, Singapore gave up 1.2 per cent and Seoul was one per cent lower.
"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."
Oil prices extended losses ahead of the weekend's meeting of Opec and non-Opec production giants, with investors unsure about how much and for how long they plan to reduce output.
The commodity has come under selling pressure, having soared Monday and Tuesday, owing to uncertainty about the reduction plans while Trump has called on OPEC to lift output to keep prices low.