Hong Kong’s benchmark Hang Bed Index (HSI) was the weakest in Asia and closed 1.3%, after recovering slightly from a tumble of more than 3% earlier in the day. China’s Shanghai Composite (SHCOMP) index decreased by 0.9%. The rest of the region also struggled: South Korea’s Kospi (KOSPI) and Japan’s Nikkei (N225) lost 1% and 0.6% respectively.
“The nerves rattled the investors’ nerves,” which muddy the geopolitical waters, “said Jeffrey Halley, senior market analyst for the Pacific in Oanda.
Washington on Monday announced sanctions against two Chinese officials for “serious human rights violations” against Uyghur Muslims and other ethnic minorities in Xinjiang. The European Union, Canada and the United Kingdom have all imposed the same individuals and other sanctions, a testament to unity by Western allies as they continued to condemn Beijing’s treatment of Uyghurs in the region.
China denounced the actions and almost immediately struck back against the European Union, announcing its own sanctions against ten EU politicians and four institutions for “maliciously spreading lies and disinformation.”
Guy Verhofstadt, a senior member of the European Parliament, even said that China’s decision to shoot back ‘killed’ a major investment agreement between Brussels and Beijing that had yet to be ratified. The agreement, which has been in progress for years, was designed to balance trade with the second largest economy in the world.
Shortly after the Chinese sanctions were announced, the second largest group of lawmakers in the European Parliament said they would not hold talks on the agreement until the measures were lifted.
The flare-up comes after a few days that were already tense. Talks between the United States and China in Alaska led to a tense confrontation late last week during the first personal meeting between senior leaders on both sides since U.S. President Joe Biden.
The news of the sanctions has sparked a particularly difficult day for technology stocks in Hong Kong. The Hang Seng Tech Index, which includes 30 major technology companies, including Alibaba and Tencent, tumbled 2.6%. Alibaba (BABY) and Tencent (TCEHY) slipped 0.5% and 0.8% each. Meituan and Xiaomi lost 5.2% and 4.1% respectively.
The marketers also seem to have hurt the Chinese internet giant Baidu, (BIDU) which on its first day of trading on Tuesday launched a secondary listing in Hong Kong to a loud response.
The $ 3.1 billion listing for the company, which already trades in New York, has been overwhelming. It ends the day at 252.20 Hong Kong dollars ($ 32.47), less than 1% above the offer price of 252 Hong Kong dollars ($ 32.45). It was the city’s largest secondary listing since JD.com (JD) according to data provider Refinitiv raised $ 4 billion in June last year.
“Battle lines draw between [the] US and China around Internet technology dominance, “said Stephen Innes, chief global strategist for online broker Axi in Sydney.” You have to think that the less foreseeable sitdown last week is likely to hold some enthusiasm as [the] The US may continue to restrict Chinese technology. ‘
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