Shanghai stocks post biggest weekly drop in three months as ZTE and telecom makers tumble
- ZTE and other telecom stocks retreat after US officials reportedly abandon plan to allow US companies to restart business with Huawei
- China’s consumer prices in July rose at the fastest pace since February 2018, reducing room for policy easing
China and Hong Kong stocks ended the week on a softer note on Friday, with the mainland’s benchmark capping the worst five straight days of trade in three months, as ZTE and other telecom equipment makers retreated on renewed concern the ongoing trade war will disrupt business operations.
The Shanghai Composite Index fell 0.7 per cent to 2,774.75. The gauge lost 3.3 per cent for the week, its biggest decline for the five-day period since May 10. Hong Kong’s Hang Seng Index dropped 0.7 per cent to 25,939.30, declining for the first time in three days.
The US has reportedly reversed its decision to allow American companies to resume business with Huawei Technologies, China’s biggest maker of telecom equipment, as retaliation against Beijing’s recent move to halt purchases of American agricultural products amid the intensifying trade war.
Also weighing on sentiment was a report released on Friday morning by the National Bureau of Statistics which showed that July inflation accelerated to the fastest pace since February last year. That may weaken the case for policymakers to loosen monetary policies.
“The halt of the expected approvals of some US companies to supply Huawei with components had a significant impact on the tech and telecom sectors,” said Gerry Alfonso, director with the international business department with Shenwan Hongyuan Group in Shanghai. “Volatility in tech and telecom names is likely to remain high as the opposing forces of a very positive outlook for 5G technology is compensated by the uncertainty in the trade front.”