(Bloomberg) -- Chinese suppliers to Huawei Technologies Co. have become the latest targets of the country’s speculative retail investors.
Sanchuan Wisdom Technology Co. and Archermind Technology Nanjing Co. are among the mainland-listed stocks to surge since the U.S. said it would curb Huawei’s access to the U.S. market and American suppliers. The companies have said they have projects with Huawei.
Investors are betting the firms will benefit because Huawei will have to depend on domestic suppliers for both itself and HiSilicon, a subsidiary that makes semiconductors.
Big moves in stocks related to policy announcements or news headlines are not uncommon in China’s equity market, where retail investors dominate trading. Chinese stocks linked to 5G and tech infrastructure jumped earlier this year. The same happened with shares related to the development of the Xiong’an area near Beijing in 2017. The rallies fizzled out shortly afterward.
"Investors piling into the Huawei/HiSilicon trade are not in it for the long run," said Zhang Yankun, a fund manager at Beijing Hone Investment Management Co. "The stocks they are choosing are the ones that get more exposure in the media or are more talked about."
Investors are already starting to cash out of the Huawei trade. Beijing Oriental Jicheng Co. and Shenzhen Huaqiang Industry Co., which have also said they have ties to Huawei, are down at least 3% after jumping in the previous two sessions.
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