Chinese tech stocks slide following 'clear signal' the trade war is escalating
- News emerged Wednesday that Meng Wanzhou, the CFO of the Chinese tech giant Huawei, was arrested in Canada on Saturday.
- Beijing on Thursday demanded the US and China "clarify the reason for the detention" and immediately release the detainee.
- The December 1 arrest is a "clear signal that the trade war is escalating to a new level," said Zhiwei Zhang, Chief China Economist at Deutsche Bank Research.
- A handful of Chinese tech stocks were underperforming the broader market.
Chinese tech stocks were sliding Thursday after news emerged that Meng Wanzhou, the CFO of the Chinese smartphone giant Huawei was arrested in Canada at the request of US authorities.
The Canadian Justice Department detained Meng in Vancouver on Saturday, and US officials want Canada to extradite her, the agency representative Ian McLeod told Business Insider. She will have a bail hearing on Friday, Mcleod said.Chinese Foreign Ministry on Thursday demanded the US and China "clarify the reason for the detention" and immediately release the detainee.
While people are speculating Meng was charged for violating US sanctions on Iran, Huawei's spokesman Chase Skinner said in a statement that the company "has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms Meng," who is also the daughter of Huawei's founder, Ren Zhengfei.
"Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU," said Skinner.
The December 1 arrest cast doubt on the trade truce between Washington and Beijing, who agreed over the weekend to pause tariff escalations for negotiations
"We believe this is a clear signal that the trade war is escalating to a new level," said Zhiwei Zhang, Deutsche Bank's chief China economist.
"Huawei has been widely recognized as one of the most successful technology companies in China. This news pushed policy makers in Beijing into an awkward position. Public opinion in China will likely become more negative in respect to the trade war, and potentially against US companies."As a result, a handful pf Chinese tech stocks are underperforming the broader market. Here's the scoreboard as of 12:37 P.M. ET: