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Huawei: The arrest of CFO shakes the stock markets



Hong Kong's main index fell by around 2.5%, and Tokyo shares fell 1.9% on Thursday, after Canadian Finance Minister Meng Wanzhou was arrested in Canada and asked to be extradited by the US government. 19659002] The Shanghai market fell 1.7%, while US equity futures fell more than 1%. The major European indices fell around 1% in the morning to 1.5%.
The arrest of Meng, the daughter of Huawei's founder, has triggered fears of a renewed escalation of tensions between the United States and China that led to a ceasefire in the trade war less than a week ago. Uncertainty as to whether the two sides will be able to reach a lasting deal has led to volatile trading on world markets this week.

Stocks most heavily floated on Thursday included tech stocks.

Huawei is not listed on a stock exchange. ZTE (ZTCOF), a Chinese technology company that was temporarily impacted by a US export ban earlier this year, lost nearly 9%. Huawei's suppliers AAC Technologies (AACAY) and Sunny Optical (SNPTF) fell by around 6%.

Stephen Innes, head of Asia-Pacific trading at investment firm Oanda, linked the losses directly to Meng's arrest. The news has prompted investors to drain riskier assets, he wrote in a message to clients.

The Wall Street Journal reported last month that US officials have warned colleagues in countries like Germany, Japan and Italy about potential security risks with Huawei devices. This report led to a strong sell-off in more than 1
00 Chinese stocks, according to Innes.

"Great Implications" for the Trade War

It is still unclear how Meng's case will develop, but it could undermine talks between the United States and China to defuse their damaging trade war.

A Huawei spokesman said that Meng is facing unspecific charges in the eastern district of New York. The Wall Street Journal reported in April that the US Department of Justice had investigated whether Huawei had violated US sanctions against Iran.
Meng's arrest has "potentially huge impact" on the trade war and signals that the US government is ready to crack down on Chinese companies Michael Every, head of Asia-Pacific research at Rabobank investment bank.

"It's as strong a message to China's elites as a horse's head in your bed," he wrote in a note to customers, citing a famous scene from the mafia movie "The Godfather."


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