NEW YOR: Early Friday trading saw a decline in shares of Chinese firms listed in the US as Sino-US tensions increased amid rumors that Washington was aiming to increase the number of troops assisting in Taiwanese forces’ training.
Heavyweights Baidu, JD.com, and Alibaba all had 2.9% to 3.9% declines. In contrast, the Nasdaq sank 1.5% as global markets slumped following explosive inflation figures.
KraneShares CSI China Internet ETF lost 2.8%, while the iShares China Large-Cap ETF fell 2.9%.
On the condition of anonymity, a U.S. official said the precise number of more troops was unknown but that the move had nothing to do with the recent tensions over the shooting down of a Chinese spy balloon that had flown over the country.
Because the geopolitical risk is now unclear, I don’t think China is a secure location to invest, according to Dennis Dick, a trader with Triple D Trading in Ontario, Canada.
During Asian trading hours, shares of aerospace and defense companies rose as China’s blue-chip CSI300 Index finished 1% down.
The shooting down of the Chinese spy balloon strained relations between the two largest economies in the world this month, which put pressure on China ADRs following a strong advance that began in the latter part of last year.
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After soaring by over 70% from November to January, the Nasdaq Golden Dragon China index has lost 8.5% so far this month, putting it on pace to see its first fall in four months.
According to Michael Wang, deputy portfolio manager at Mirabaud Asset Management, “with the ADRs, you do have an overhang in terms of the delisting worries from last year and so with the re-emergence (of) political risk, the potential risk element has gone up a little bit.”
Last year, Chinese ADRs were affected by a number of issues, such as the possibility of being delisted from American exchanges due to an audit disagreement, trade tensions, and geopolitical concerns.
In the meanwhile, a senior American official predicted that Washington will restrict the amount of cutting-edge semiconductors produced in China by South Korean firms in an effort to undermine Beijing’s technical aspirations and obstruct its military development.
