The benchmark of Hong Kong Hang up Seng IndexHSI was Asia’s worst performer, down 1.3%, after recovering slightly from a decline of more than 3%earlier in the day. China’s Shanghai CompositeSHCOMP index fell 0.9%. The rest of the region was also struggling: that of South Korea KospiKOSPI and Japan NikkeiN225 lost 1% and 0.6%, respectively.
“Investors’ nerves were shaken” by the sanctions, “which clouded geopolitical waters,” said Jeffrey Halley, senior Asia Pacific market analyst at 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 all imposed sanctions on the same individuals and others, demonstrating unity of Western allies who continued to condemn Beijing’s treatment of Uyghurs in the region.
China denounced the measures and almost immediately retaliated against the European Union, declaring its own sanctions against 10 EU politicians and four entities 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 deal between Brussels and Beijing that has yet to be ratified. The deal, which has been worked on for years, has been designedto rebalance trade with the world’s second largest economy.
Shortly after the Chinese sanctions were announced, the second-largest group of lawmakers in the European Parliament said they would not start talks on the deal until the measures are lifted.
The flare-up comes after what has been an exciting few days. Talks between the United States and China in Alaska led to a tense showdown late last week during what was the first face-to-face meeting between senior leaders on both sides since US President Joe Biden took office.
The news of the sanctions made for a particularly tough day for technology stocks in Hong Kong. The Hang Seng Tech Index, which tracks 30 major tech companies, including Alibaba and Tencent, plunged 2.6%. AlibabaBABA and TencentTCEHY slipped 0.5% and 0.8% each. Meituan and Xiaomi lost 5.2% and 4.1% respectively.
The market cramps also seemed to hurt the Chinese internet giant Baidu,GET STARTED which launched a secondary listing in Hong Kong following a lukewarm response to Tuesday’s first trading day.
The $ 3.1 billion listing for the company, which already trades in New York, was impressed. It ended the day at 252.20 Hong Kong dollar ($ 32.47), less than 1% above the offer price of 252 Hong Kong dollar ($ 32.45). It has been the city’s largest secondary list ever since JD.comJD According to data provider Refinitiv, it raised $ 4 billion last June.
‘Battle lines are drawn between them [the] US and China on Internet technology dominance, ”said Stephen Innes, lead global market strategist for Sydney-based online broker Axi. [the] The US could continue to tackle Chinese technology. “
