A new China-US flare-up sent markets tumbling on Friday, while the mood was also soured by US lawmakers’ struggles to agree on a new economic stimulus - all against a backdrop of surging virus infections.
China-US tensions were back on traders’ minds after President Donald Trump signed an executive order barring US residents from doing any business with the Chinese parent companies of social media platforms TikTok and WeChat, citing national security concerns.
The move, which comes into force in 45 days, is the latest salvo in a tech stand-off between the superpowers and adds to a laundry list of issues they have butted heads over in recent months, including Hong Kong, Huawei and the coronavirus.
WeChat parent Tencent sank 10% at one point in Hong Kong before ending almost 6% off, while the city’s Hang Seng Index dropped. The yuan also took a hit against the dollar.
“The US government is expected to follow up with more measures targeting Tencent,” Steven Leung, at UOB Kay Hian (Hong Kong), said.
The move rippled around Asian markets, with investors concerned about increasingly bitter relations between the economic titans that some fear could lead to a renewal of their painful trade war.
China accused the US of “arbitrary political manipulation and suppression” and said it came at the expense of US users and companies. The news overshadowed data showing a surprise jump in Chinese exports for July.
Hong Kong dived 1.6% and Shanghai dropped 1%, while Tokyo finished 0.4% lower. Wellington and Jakarta gave up 1%, while Sydney, Mumbai, Taipei, Singapore, Manila and Bangkok were also in the red. Seoul edged up, however.
“Apart from the obvious fallout to Tencent and ByteDance, Washington DC’s moves are sure to ratchet up geopolitical tensions with Beijing once again,” said OANDA’s Jeffrey Halley.
Meanwhile, a group of regulators working for Trump suggested stock exchanges impose stricter rules on firms to open up their audit papers to US accountants, which could lead to the delisting of Chinese companies.
Published in The Express Tribune, August 8th, 2020.
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