Pessimism Returns to Chinese Stocks Before Xi-Trump Meeting
Chinese Shares Drop as Huawei Report Hits Tech and G20 Looms
(Bloomberg) -- Investors in Chinese stocks aren’t taking any chances before next week’s meeting between presidents Xi Jinping and Donald Trump.
The Shanghai Composite Index tumbled 2.5 percent Friday, its biggest loss in five weeks. Technology shares led declines after the Wall Street Journal said the U.S. is urging allies to avoid using equipment from China’s Huawei Technologies Co.
The measure had climbed nearly 9 percent from Oct. 18 through Monday, giving investors some respite from this year’s plunge. But the gains of the past month have now evaporated -- the Shanghai Composite also fell more than 2 percent Tuesday. It is down 22 percent in 2018 as the trade war and slowing growth shattered confidence. Trump and Xi are due to meet at the Group of 20 summit in Argentina.
“People are turning cautious ahead of the meeting,” said Linus Yip, a strategist at First Shanghai Securities. “The restrictions over Huawei have increased concern about U.S.-China relations.”
Foxconn Industrial Internet Co. and 360 Security Technology Inc. were among the biggest drags on the Shanghai measure. A gauge of telecommunication stocks tumbled 3.4 percent, led by Dr. Peng Telecom & Media Group Co.
U.S. officials have contacted counterparts and executives in countries including Japan, Italy and Germany about perceived cybersecurity risks with Huawei equipment, according to a report in the Wall Street Journal. The U.S. may increase aid for telecom development in countries that shun the company, the report said, citing people familiar with the matter.
Some railway-related stocks advanced after Bloomberg reported that Beijing-Shanghai High-Speed Railway Co. is planning to raise 30 billion yuan ($4.3 billion) in an initial public offering. China Railway Construction Corp. rose as much as 3.2 percent in Shanghai and China Communications Construction Co. added 2.3 percent, though both later swung to losses.
The Hang Seng Index fell 0.4 percent in Hong Kong, taking its weekly decline to 1 percent. Tencent Holdings Ltd. weighed on the benchmark with a 1.4 percent slide, while newly-listed food-delivery giant Meituan Dianping plunged 12 percent after results showed its operating losses more than tripled.
To contact Bloomberg News staff for this story: Jeanny Yu in Hong Kong at jyu107@bloomberg.net;Amanda Wang in Shanghai at twang234@bloomberg.net;Sofia Horta e Costa in Hong Kong at shortaecosta@bloomberg.net
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Will Davies
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