Markets

China and HK shares slump, tech leads losses after Huawei CFO arrest

China and HK shares slump, tech leads losses after Huawei CFO arrest

Chinese officials on Wednesday demanded the return of Meng Wanzhou, the chief financial officer of Huawei Technologies and a member of its board, who was arrested by Canadian law enforcement in Vancouver on Saturday at the request of U.S. authorities.

Meanwhile, a clerk at the B.C. Supreme Court says Meng appeared in court Wednesday and a bail hearing is scheduled for Friday. The U.S. has reportedly requested Meng be extradited to NY, where she would reportedly face federal charges of violating Iran sanctions.

"The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms Meng". Almost every company on the FTSE suffered losses as a global sell-off continued after the arrest of a top executive from Chinese technology giant Huawei sparked fears of an escalation in the US-China trade war.

The Chinese embassy in Canada responded to news of Meng's arrest by lodging stern representations against the U.S. and Canadian governments and calling for her immediate release.

The Wall Street Journal reported in April that American authorities are investigating whether the Chinese tech company violated sanctions on Iran. The U.S. has been looking into Huawei's alleged shipping of products to Iran since 2016, as these actions violate the country's export and sanctions laws. It surpassed Apple in smartphone sales in the second quarter of this year, leaving it behind only market leader Samsung.

The arrest coincided with a highly anticipated meeting between Chinese President Xi Jinping and US President Donald Trump in Buenos Aires that resulted in a 90-day trade war truce to allow for further talks to address Washington's concerns.

Details of the arrest have not been released but the USA has been investigating Huawei over possible violation of sanctions against Iran.

In a statement on Wednesday, Canada's justice ministry said Meng was arrested in Vancouver on December 1.

Senator Mark Warner tweeted Thursday that "There is ample evidence to suggest that no major Chinese company is independent of the Chinese government. and Huawei.is no exception".

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Founded in China more than 30 years ago, Huawei's revenue in 2018 exceeded $100billion for the first time in its history, according to CNBC. "But U.S. intelligence officials have been questioning Canada's ability as to whether it can actually test whether Huawei is being secure, or whether it's letting anything leak to the Chinese government".

Analysts have speculated that the executive's arrest was linked to alleged violations of US sanctions on Iran. The U.S. Justice Department declined to comment about the arrest.

Under former President Barack Obama, the USA government pressured allies to limit their use of Huawei technology due to security concerns.

He added that the United States has had "enormous concerns for years about the [.] practice of Chinese firms to use stolen American intellectual property, to engage in forced technology transfers, and to be used as arms of the Chinese government's objectives in terms of information technology in particular".

Geng, the foreign ministry spokesman, said China objects to unilateral sanctions outside the United Nations.

If there is no deal at the end of that period, the U.S. will increase tariffs on US$200 billion of Chinese goods from 10 per cent to 25 per cent.

USA media have reported that Huawei is under investigation for potential violations of United States sanctions against Iran.

Huawei Technologies, launched in 1987 in Shenzhen China, has been the largest telecommunication equipment producer in the world since 2012.

The SCMP obtained a transcript of an internal question-and-answer between Meng and her father, Huawei's founder Ren Zhengfei.


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