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Chinese stocks slump as Huawei arrest sparks trade deal fears

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Chinese stocks slump as Huawei arrest sparks trade deal fears

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Asia-Pacific equities

Chinese stocks slump as Huawei arrest sparks trade deal fears

China-focused stocks were the among the worst performers in the region on Thursday after the arrest of Huawei's chief financial officer in Vancouver reignited concerns about US-China trade tensions.

The Hang Seng China Enterprises index of large-cap Chinese companies listed in Hong Kong fell as much as 3.1 per cent while the broader Hang Seng index was down as much as 2.9 per cent.

In China the CSI 300 index of Shanghai and Shenzhen-listed stocks fell 1.6 per cent. The Shanghai Composite index was down 1.3 per cent, as was the Shenzhen Composite. Among the hardest hit in the region were Chinese electronics suppliers, with ZTE down as much as 6.7 per cent.

Elsewhere in the region losses for equities were holding fast as the trading day wore on, with Tokyo's Topix off 2.2 per cent and Sydney's S&P/ASX 200 down 0.4 per cent. 

Those falls came after Canadian officials confirmed that Ms Meng had been detained on Saturday after her extradition was sought by the United States. Huawei said it was not aware of any wrongdoing by Ms Meng and Chinese officials urged the US and Canada to immediately release her.

The bid by the US to extradite Ms Meng comes against a backdrop of heightened tension over trade and technology between the US and China after US President Donald Trump and China’s President Xi Jinping agreed at the G20 in Argentina to a temporary truce to allow negotiators more time to work toward a deal. 

Natixis senior economist Trinh Nguyen said news of the arrest “adds to the fear that the two sides are further apart after Buenos Aires”.

“The question moving forward is: ‘what is China’s response to this?’ As in whether China and the US will move closer together than they are today to give global markets a much-needed respite or further apart,” Ms Nguyen said.

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