Broad Markets Sell off as Rout Continues

The arrest of Huawei Chief Financial Officer Meng Wanzhou in Canada jolted market sentiment in Asia as investors assessed the economic and supply chain implications on an already-strained relationship between the U.S. and China.

Technology stocks across the region were under pressure, including many Huawei partners and suppliers.

The Nikkei 225 lost 417.71 points, or 1.9%, to 21,501.62

Shares of Nikkei heavyweight SoftBank Group fell 4.9%. Last year, SoftBank and Huawei jointly demonstratedpotential use of the next generation of high-speed mobile internet; SoftBank is taking its mobile unit public on Dec. 19.

The negative sentiment rippled through the broader Japanese tech sector, with shares of Tokyo Electron down 4.5%, Advantest falling 5.3% and TDK Corp dropping 6.6%.

The Japanese yen, widely seen as a safe-haven currency, traded at 112.92 against the U.S. dollar.

In Hong Kong, the Hang Seng Index plummeted 663.3 points, or 2.5%, to 26,156.38

Chipmaker Samsung tumbled 2.3%. Sunny Optical, which makes some of the lenses for Huawei phones, fell 5.5% and AAC Technologies declined 5.6% on the day. Chinasoft International, where Huawei is a strategic shareholder, dropped 11.7%.

Taiwan’s major tech names also struggled: Catcher Technology fell 9.9%, Taiwan Semiconductor was down 2.7%, Largan Precision lost 9.9%, and iPhone assembler Hon Hai dropped 3.6%. Asia’s Apple suppliers, in general, saw Thursday declines.

Oil concerns were hit, as Japan’s Inpex fell 0.9% and Fuji Oil was down 2.4%. South Korea’s S-Oil slipped 2.7% while SK Innovation declined 3.8%. Chinese oil names listed in Hong Kong and Shanghai were also down.

ZTE shares listed in Hong Kong were down 5.9% on the day.

Both Huawei and ZTE are restricted from selling telecoms equipment in the U.S. due to what the U.S. describes as national security concerns.

Australian markets were down as well, after the country’s trade surplus for the month of October missed forecasts, coming in at around 2.3 billion Australian dollars (approximately $1.67 billion U.S.) instead of the expected 3.2 billion Australia dollars (roughly $2.32 billion U.S.).

In Australia, Santos slipped 1.4%, Oil Search was down 0.3% while Woodside Petroleum declined 0.1%.

The Australian dollar was at $0.7219 U.S.

CHINA

In Shanghai, the CSI 300 dropped 70.33 points, or 2.2%, to 3,181.67

Analysts at Jefferies pointed out that Huawei has a major global presence in various technology areas such as telecommunications
equipment, semiconductors, smartphones and cloud computing. It also represents a major growth driver for many tech manufacturers.

Huawei’s Meng, who is the daughter of the company’s founder, faces extradition to the U.S., according to Canada’s Department of Justice.

While the arrest represents a new escalation in American efforts to hold Chinese companies accountable for violation of U.S. laws, it is likely to elicit an angry reaction from Beijing, according to Eurasia Group.

In other markets

In Taiwan, the Taiex index tumbled 232.02 points, or 2.3%, to 9,684.72

In Korea, the Kospi index skidded 32.62 points, or 1.6%, at 2,068.69

In Singapore, the Straits Times Index declined 40.4 points, or 1.3%, to 3,115.25

In New Zealand, the NZX 50 docked 23.31 points, or 0.3%, to 8,758.22

In Australia, the ASX 200 subtracted 10.7 points, or 0.2%, to 5,657.65