Asia stock falls after Canada arrests Huawei CFO
Asian shares tumbled on Thursday after Canadian authorities arrested a top executive of Chinese tech giant Huawei for extradition to the United State, fanning fears of a fresh flareup in tensions between the US and China.
According to Reuters, the news came as Washington and Beijing begin three months of negotiations aimed at de-escalating their bruising trade war, which is adding to global investors’ worries over rising U.S. interest rates and other risks to global economic growth.
S&P500 e-mini futures ESc1 fell almost 2 percent at one point in thin Asian morning trade and were last were down 1.2 percent.
The losses in the first few minutes of trading might have been even steeper, but CME Group’s Chicago Mercantile Exchange implemented a series of 10-second trading halts that helped limit the initial drop.
Japan’s Nikkei .N225 slid 1.7 percent, with semi-conductor related shares leading the losses. Huawei is one of the world’s largest makers of smartphones and telecommunications network equipment.
MSCI’s ex-Japan Asia-Pacific index fell 1.2 percent .MIAPJ0000PUS. Hong Kong’s Hang Seng .HSI dropped 2.1 percent while Shanghai shares .SSEC dropped 0.9 percent.
Canadian authorities said they had arrested Huawei’s global chief financial officer in Vancouver, where she is facing extradition to the United States.
The arrest is related to violations of U.S. sanctions, a person familiar with the matter said, though officials have so far stayed mum on her allegations.
The arrest heightened the sense of a major collision between the world’s two largest economic powers not just over tariffs but also over technological hegemony.
Britain’s BT said on Wednesday it was removing Huawei’s equipment from the core of its existing 3G and 4G mobile operations. Australia and New Zealand have also rejected Huawei’s products.
“The U.S. has been telling its allies not to use Huawei products for security reasons and is likely to continue to put pressure on its allies,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“So while there was a brief moment of optimism after the weekend U.S.-China talks but the reality is, it won’t be that easy,” he said.
Reuters
