Huawei arrest weighs on China, Hong Kong stocks as Beijing summons US, Canadian envoys
- Investors worry about the impact of the arrest of Meng Wanzhou, chief financial officer of Huawei, on trade war truce
- Investors also take note of new China data showing weak domestic and overseas demand
Hong Kong stocks slid to a three-week low and Chinese equities also retreated on concern the US-China tensions will escalate over the detention of an executive at Huawei Technologies and as the release of initial economic data foreshadows further moderation in China’s growth.
The benchmark Hang Seng Index declined 1.2 per cent, or 311.38 points, to 25,752.38 on Monday, the lowest close since November 14. The Hang Seng China Enterprises Index fell 0.9 per cent. In the mainland, the Shanghai Composite Index shed 0.8 per cent, or 21.31 points, to 2,584.58. Markets elsewhere in Asia also headed south, with benchmarks in Japan and Australia sinking at least 1.9 per cent.
A sell-off on Chinese pharmaceutical stocks continued, wiping out 106.3 billion yuan (US$15.4 billion) in market capitalisation over the past three days, as an official government statement said over the weekend that a new centralised procurement process for generic drugs has slashed prices on average by 52 per cent from last year.
Beijing over the weekend summoned the US and Canadian ambassadors to China to protest against the arrest of Sabrian Meng Wanzhou, chief financial officer of Huawei, who is accused of violating US sanctions by selling equipment to Iran.
Meanwhile, China’s preliminary key November data pointed to a slowdown in the world’s second-largest economy. Growth in overseas shipments fell to an eight-month low of 5.4 per cent, while gains in producer prices weakened to 2.7 per cent for a fifth straight month of deceleration.