Hong Kong landmark Hang Seng Index (HSI) was the weakest performance in Asia, closing at 1.3%, after recovering slightly after a fall of over 3% earlier in the day. In China Shanghai Composite (SHCOMP) the index decreased by 0.9%. The rest of the region also fought: South Korea Kospi (KOSPI) and Japan Nikkei (N225) lost 1% and 0.6%, respectively.
“Investors’ nerves have been shaken” by sanctions, “clouding geopolitical waters,” said Jeffrey Halley, senior market analyst for Asia-Pacific in Oanda.
Washington on Monday announced sanctions against two Chinese officials for “serious human rights violations” against Uighur Muslims and other ethnic minorities in Xinjiang. The European Union, Canada and the United Kingdom imposed sanctions on the same individuals and others, a demonstration of the unity of Western allies, while they continued to express condemnation of Beijing’s treatment of the Uighurs in the region.
China denounced the moves and struck the European Union almost immediately, announcing its own sanctions against 10 EU politicians and four entities for “spreading lies and misinformation”.
Guy Verhofstadt, an elderly member of the European Parliament, even said that China’s decision to revoke “killed” a major investment agreement between Brussels and Beijing that has not yet been ratified. The agreement, which has been in place for years, is being designed to rebalance trade with the world’s second largest economy.
Shortly after the Chinese sanctions were announced, the second largest group of parliamentarians in the European Parliament said they would not discuss the agreement until measures were lifted.
The revolution comes after several days of tension. Talks between the United States and China in Alaska led to a tense confrontation late last week, during the first in-person meeting between leaders on both sides since US President Joe Biden took office.
Sanctions news has fueled a particularly tough day for Hong Kong’s technology stocks. The Hang Seng Tech Index, which tracks 30 major technology companies, including Alibaba and Tencent, fell 2.6 percent. Alibaba (crone) and Tencent (TCEHY) slipped 0.5% and 0.8% each. Meituan and Xiaomi lost 5.2% and 4.1%, respectively.
The nervousness of the market also seemed to hurt the Chinese internet giant Baidu, (START) which launched a secondary list in Hong Kong to a warm response on the first trading day on Tuesday.
The company’s $ 3.1 billion listing, which is already trading in New York, has been overwhelmed. It ended the day with $ 252.20 Hong Kong ($ 32.47), less than 1% above its bid price of $ 252 Hong Kong ($ 32.45). It was the city’s largest secondary list since then JD.com (JD) raised $ 4 billion in June last year, according to data provider Refinitiv.
“The battle lines are drawn between [the] The United States and China have dominated Internet technology, “said Stephen Innes, Sydney’s leading global market strategist for online broker Axi.” You have to think that last week, quickly, less than amicably, probably retains a certain enthusiasm [the] The US could continue to limit Chinese technology. “
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