China stocks near 3-month low as Huawei ban adds to nerves

Richard Yu, chief executive officer of Huawei, presents the Mate X foldable 5G mobile device during a Huawei launch event ahead of the MWC Barcelona in Barcelona, Spain, on Sunday, Feb. 24, 2019. (Stefan Wermuth/Bloomberg)
Richard Yu, chief executive officer of Huawei, presents the Mate X foldable 5G mobile device during a Huawei launch event ahead of the MWC Barcelona in Barcelona, Spain, on Sunday, Feb. 24, 2019. (Stefan Wermuth/Bloomberg)

China’s stocks traded near their lowest since February, with the damage caused by escalating tensions with the US rout now topping $1.1 trillion.

The Shanghai Composite Index fell 0.4% at the close, after earlier losing as much as 1.5%. The gauge is now among the world’s worst-performing national benchmarks this quarter, after beating every other market earlier in the year. Volume on the index was about 34% lower than the 30-day average, a sign that traders are reluctant to jump back into the market, data compiled by Bloomberg showed.

Optimism that China would soon rescue its tumbling markets is fading after stocks sank for a fourth week. Investors Monday reacted to news that some top US companies have stopped supplying critical software and components to China’s Huawei Technologies Co., a sign that relations with the US aren’t improving. The country’s central bank warned late Friday that the escalating trade war could destabilise the global economy.

"The newsflow over the weekend, including the Huawei ban, shows that there is no sign of easing over the trade tensions," said Zhang Gang, a strategist at Central China Securities in Shanghai. "Retreating foreign investors from the A-share market and weakened expectation about the yuan are also hurting sentiment."

Stocks moving on the Huawei news included Luxshare Precision Industry Co. and Ofilm Group Co., which lost at least 6.7%. Shenzhen Goodix Technology Co. dropped by the 10% daily limit. In Hong Kong, Sunny Optical Technology Group Co. fell 5%, and Q Technology Group Co. slumped 8.3%.

Adding to the risk-off mood was news that Liu Shiyu, the former head of China’s securities regulator, is under investigation for suspected law violations. That weighed on shares of banks in Jiangsu, the province where Liu’s reported hometown is located. Jiangsu Zijin Rural Commercial Bank Co. slumped 4.6%, while Jiangsu Suzhou Rural Commercial Bank Co. dropped 4.2%.

Seven of the lenders based in the province listed their shares during Liu’s tenure at the China Securities Regulatory Commission, which ended in January.

The Hang Seng China Enterprises Index closed 0.5% lower. The small-cap ChiNext gauge lost 0.6%, extending its slide since an April peak to 17%. Foreigners have been selling A shares at a record pace this month as the yuan weakened.

ZAR/USD
17.58
(-0.95)
ZAR/GBP
22.94
(-0.23)
ZAR/EUR
20.72
(-0.13)
ZAR/AUD
12.61
(-0.09)
ZAR/JPY
0.17
(-0.62)
Gold
2037.49
(-1.52)
Silver
28.05
(-5.73)
Platinum
963.00
(-3.55)
Brent Crude
45.10
(-0.18)
Palladium
2137.00
(-4.02)
All Share
56757.73
(-1.56)
Top 40
52435.65
(-1.72)
Financial 15
9897.96
(+0.10)
Industrial 25
74671.49
(-1.98)
Resource 10
58948.78
(-1.89)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 923 votes
It depends on how the funds are used.
74% - 6209 votes
No. We should have gotten the loan elsewhere.
15% - 1276 votes
Vote