SHANGHAI (BLOOMBERG) – Chinese tech stocks dropped on Wednseday (Oct 27) as US-China tensions flare up again with Washington moving to restrict the Asian nation’s companies and calling for a greater role by Taiwan in the United Nations.
The Hang Seng Tech Index, which tracks mostly Chinese technology firms traded in Hong Kong, declined as much as 3.4 per cent. More broadly, the CSI 300 Index slid as much as 0.9 per cent, while the Hang Seng Index lost 1.8 per cent.
US Secretary of State Antony Blinken said in a statement on Tuesday that the exclusion of Taiwan, which China considers part of its territory, from the UN “undermines the important work” of the international body. On the same day, the Federal Communications Commission voted to force China Telecom, one of three leading communications providers in China, to close its US business.
“The revoking of China Telecom’s operating license seems to dampen previous hopes that the US-China relations may be turning for the better,” said Jun Rong Yeap, a market strategist at IG Asia. “The move has raised some doubts as to whether further escalation may bring back more US scrutiny on Chinese technology players.”
Though China Telecom doesn’t do a lot of business in the United States, being barred from the market is significant, after moves against other giants of China’s burgeoning tech industry, including Huawei Technologies.
The stock declines followed a slump in Chinese shares listed in the US overnight, with the Nasdaq Golden Dragon China Index tumbling more than 4 per cent in its biggest loss in more than a month.