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Lenovo drives China tech slump as fallout from ZTE ban spreads
[HONG KONG] Lenovo Group Ltd. sank to its lowest level since 2009 as a U.S. ban on ZTE Corp. undermined sentiment toward China's technology sector.
The company's shares dropped 3.4 per cent in Hong Kong as of 11:50 a.m. local time. The MSCI China Technology Index slipped 0.8 percent. ZTE shares have been suspended from trading since the U.S. government imposed a seven-year ban on its purchases of crucial American components last week.
"Investors are worried about companies that are doing lots of businesses in the U.S.," said Bocom International analyst Chris Yim. "So far Lenovo is not affected by the U.S.-China tensions. It is not facing bans like ZTE, but the market is just worried." Bears are targeting Lenovo in particular amid doubts that a company once regarded as a potential challenger to Apple Inc. may not be able to revive itself. Short interest has surged as a rout in the shares deepened: the stock has fallen more than 70 per cent in the past three years, erasing US$13 billion of value. Lenovo said in an email that it doesn't comment on its share price or speculation.
Chinese hardware makers are also being squeezed by concern over global smartphone demand following a weaker than expected outlook by Taiwan Semiconductor Manufacturing Co., Apple Inc.'s main supplier. Luxshare Precision Industry Co. and Han's Laser Technology Industry Group Co. plunged more than 7 per cent in Shenzhen trading.