China Tech Stocks Suffer Most as Trade War Fears Rattle Markets

(Bloomberg) -- Chinese tech and telecom stocks were the hardest hit Monday as two tweets from U.S. President Donald Trump soured the outlook on trade talks and sent global markets plunging.

A gauge of information technology stocks dropped 5.8 percent, the most since July 2015, leading the MSCI China Index lower. Telecom equipment maker ZTE Corp. tumbled as much as 13 percent before paring the decline to 8.8 percent in Hong Kong, while Apple Inc. supplier GoerTek Inc. slumped by the 10 percent daily limit in Shenzhen.

China’s foreign ministry said that officials were still planning to travel to the U.S. for the next round of talks but was unable to confirm when, amid signs that a delay is now being considered. The response came after Trump said in tweets that progress on trade talks was too slow and threatened to slap steeper tariffs on Chinese goods.

“If the trade talks don’t go well, China’s 5G-related companies will definitely be affected,” said Amy Lin, a Shanghai-based analyst with Capital Securities Corp., referring to names linked to next generation telecom networks. “The sector is also under correction pressure after their strong gains.”

China Tech Stocks Suffer Most as Trade War Fears Rattle Markets

MSCI China’s tech stocks gauge surged 34 percent this year through last week, the second-best performer, helped by earlier optimism over trade talks. The sector has become a trade war proxy as giants from ZTE Corp. to Huawei Technologies Co. found themselves at the center of an escalating technology rivalry between China and the U.S. The MSCI sub-gauge tumbled as much as 7 percent Monday, while the ChiNext gauge of tech firms and small caps fell 7.9 percent in Shenzhen, its biggest loss since January 2016.

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