SYDNEY: Asian shares broke support and caved to a four-month low on Thursday, as concerns grew that the Sino-US trade conflict was fast morphing into a prolonged technology cold war between the world’s two largest economies.
Late Wednesday, Reuters reported the US administration was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country’s treatment of its Uighur Muslim minority, according to a person briefed on the matter.
After the United States placed Huawei Technologies on a trade blacklist last week, British chip designer ARM has halted relations with Huawei in order to comply with the blockade.
Digging the knife in, the US military said it sent two Navy ships through the Taiwan Strait on Wednesday.
“Both the US and China appear to be preparing for a prolonged period of trade conflict,” wrote analysts at Nomura in a note on the standoff.
“We think domestic pressures and constraints will drive both sides towards further escalation,” they warned. “Without a clear way forward during an intensifying 2020 US presidential election, we see a rising risk that tariffs will remain in effect through end 2020.”
Shanghai blue chips shed 1.2 per cent in response to be near their lowest since February. An index of major telecoms firms fell 2.7 per cent as suppliers to Huawei suffered.
MSCI’s broadest index of Asia-Pacific shares outside Japan touched its lowest in four months and was last down 0.7 per cent.
Japan’s Nikkei lost 0.7 per cent and South Korea 0.3 per cent. Also feeling the pain, E-Mini futures for the S&P 500 dropped 0.4 per cent.
Source: Economic Times