Chinese technology stocks fall to lowest in 43 months ahead of deadline for US tariffs
On Friday US tariffs on US$34 billion of Chinese goods are set to go into effect, raising investor fears over the global economic outlook
China’s main stock index that tracks technology and other new economy firms fell to its lowest in three and a half years on Thursday, one day ahead of a deadline for the imposition of US tariffs that would target China’s technology and other exports.
The Shenzhen Component Index, home to more than 2,000 stocks in sectors from technology to consumer goods, fell 1.9 per cent to close at 8,862.18, the lowest level since November 2014. The ChiNext Price Index, which tracks 100 companies in faster growing sectors that are key to China’s future economic growth, lost 2.1 per cent to 1,532.68.
“The US tariffs, coupled with a falling yuan, will significantly increase the cost for many Chinese technology companies that rely on imported raw materials, such as semiconductors, integrated circuits and electric components,” said Zhang Xia, an analyst for China Merchants Bank Securities.
Starting on Friday, the US will impose 25 per cent tariffs on 818 Chinese products, which are worth US$34 billion a year. The goods range from cars, robotics and machinery to information and communication products. A second round of tariffs targeting 284 Chinese products worth US$16 billion could come later this summer.
The Shanghai Composite Index also felt the heat, though it fared a little better because it is dominated by state-owned companies in so-called old economy sectors such as energy and financials. It briefly rose after the opening before closing the day lower by 0.9 per cent at 2,733.88, a 28-month low.
In Shenzhen, electronics component makers XDC Industries and Shenzhen Fluence Technology plunged by the daily allowed maximum of 10 per cent to 20.22 yuan and 23.86 yuan respectively. Hunan Goke Microelectronics sank 6.5 per cent to 59.86 yuan.
