Shares in China’s big tech groups fell after Washington unveiled sanctions targeting Beijing, fuelling concerns over a potential broader decoupling of the world’s two biggest economies.
Tencent fell another 3.3 per cent in Hong Kong on Monday, adding to Friday’s 5.5 per cent loss after the Trump administration said at the end of last week that it would ban US companies from dealing with the Chinese group’s popular WeChat messaging app.
The Hong Kong-listed shares of Alibaba dropped 2.3 per cent, even though the Chinese ecommerce group was not directly affected by the US orders, which also targeted ByteDance, the owner of popular video app TikTok.
Growing concerns over rising temperatures between Beijing and Washington have scythed billions of dollars of market value from China’s fast-growing internet companies over the last two trading sessions.
US President Donald Trump on Friday imposed sanctions on 11 Chinese and Hong Kong officials in response to Beijing imposing a sweeping national security law on the semi-autonomous territory. The officials subject to sanctions include Carrie Lam, Hong Kong’s leader.
“These actions are pushing forward the China-US decoupling,” said Ken Cheung, a strategist at Mizuho Bank in Hong Kong, referring to the US sanctions.
He said investors were nervous that deepening tension could unravel the so-called phase one trade deal signed between Beijing and Washington at the start of this year, though added he did not believe the agreement was in any immediate danger.
China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed shares fell as much as 1.3 per cent and Hong Kong’s Hang Seng dropped as much as 1.1 per cent in early trading. But by early afternoon the indices had retraced those losses and were up by 0.4 per cent and trading flat, respectively.
Elsewhere in Asia on Monday, South Korea’s Kospi index added 1.5 per cent while Australia’s S&P/ASX 200 climbed 1.9 per cent. Markets in Japan were closed for a public holiday.
Traders were also keeping an eye on manoeuvres in Washington and their implications for new US economic support measures. Mr Trump on Saturday bypassed lawmakers and signed executive orders aimed at cushioning the economic blow from coronavirus.
His move, which followed the collapse of talks with Democrats, provides $400 a week in payments to unemployed Americans — less than the $600 a week that was previously available. Democrats condemned Mr Trump’s orders as “weak and unconstitutional”.
Charles Evans, head of the Chicago Federal Reserve, on Sunday warned that “another support package is really incredibly important”.
Futures markets tipped the S&P 500 to open 0.3 per higher when US trading begins later in the day. The index closed Friday a touch higher following better-than-expected employment data that showed the US added 1.7m jobs in July.
Futures trading pointed to a 0.8 per cent rise for London’s FTSE 100.
Oil rose after Saudi Arabia’s state energy group Saudi Aramco said on Sunday that it was experiencing a “partial recovery in the energy market”, with chief executive Amin Nasser saying “the worst is likely behind us”.
Brent crude, the international benchmark, advanced 1.1 per cent to $44.88 a barrel while US marker West Texas Intermediate gained 1.5 per cent to $41.82.
Gold, viewed by investors as a haven during times of uncertainty, fell 0.3 per cent to $2,030.19 per troy ounce. The price of the precious metal has surged in recent weeks as fears over coronavirus outbreaks in the US prompted the dollar to weaken.