Tech rout cuts Hong Kong stocks as US mulls crackdown on Chinese investment

Trump administration reportedly considering putting limits on Chinese investments in technologies it deems ‘sensitive’

PUBLISHED : Wednesday, 28 March, 2018, 9:15am
UPDATED : Wednesday, 28 March, 2018, 10:20pm

Hong Kong stocks fell sharply on Wednesday, after a steep sell-off in technology shares pulled US equities down on Tuesday and as Washington was reported to be considering a crackdown on Chinese investment in “sensitive” US technologies.

The Hang Seng Index saw early losses widen throughout the day, finishing 2.50 per cent lower to 30,022.53. The Hang Seng China Enterprises Index, known as the H-shares index, was off 2.44 per cent at 12,001.16.

Turnover reached nearly HK$142.64 billion (US$18.18 billion) on the main board.

Internet giant Tencent slid 4.63 per cent to HK$412.20, knocking 140 points off the benchmark index. Smartphone lens maker Sunny Optical Technology tumbled 8.05 per cent to HK$147.40, the worst performing blue-chip while apple supplier AAC Technologies Holdings slumped 6.33 per cent at HK$142.10.

Reports the US government is considering a crackdown on Chinese investment in “sensitive” technologies have further refuelled concerns about an escalating trade dispute between the world’s two biggest economies, said Sam Chi-yung, a senior strategist for South China Securities.

On Tuesday, Bloomberg reported the Trump administration is considering whether to invoke a law related to national emergencies to restrict Chinese investments in certain technologies.

The US Treasury Department is working on plans to identify the technology sectors Chinese firms should be barred from investing in, and that would likely include semiconductors and 5G wireless communications.

Electric carmaker BYD buffeted by subsidy cuts

Facebook’s CEO Mark Zuckerberg, meanwhile, said he has agreed to testify before the United States Congress about the company’s data-use standards that has sent the company’s share price plummeting, dragging the tech sector down with it.

Among other Hong Kong market movers, Chinese pork producer WH Group added 0.48 per cent to HK$8.42, after reporting a 9.4 per cent increase in 2017 net profit. The company, which bought US pork processor Smithfield Foods in 2013, had suffered four straight sessions of declines before Wednesday, after China said it could impose higher tariffs on a list of US imports, including pork.

In mainland trading, the Shanghai Composite Index fell 1.40 per cent to 3,122.29. The large-cap CSI 300 shed 1.80 per cent to 3,842.72.

The Shenzhen Composite Index lost 0.95 per cent to 1,812.36, and the ChiNext Price Index dropped 0.52 per cent to 1,835.15.

Electric car maker BYD dived 8.34 per cent to 56.19 yuan in Shenzhen (and 7.95 per cent in Hong Kong) after its 2017 net profit declined 19.5 per cent from a year earlier, largely due to a sharp decrease in non-electric car sales, and in government subsidies for new-energy vehicles.