Published: Fri, December 07, 2018
Markets | By Jeffery Armstrong

World markets down after arrest of Huawei executive

World markets down after arrest of Huawei executive

"Skepticism, however, appears to have overtaken optimism once more weighing on markets this morning", Stifel economist Lindsey Piegza wrote in a research note.

Moreover, the U.S. is advising the countries to bare from using Huawei apparatus to introduce new telecommunication technologies. The Trump administration says they benefit from improper subsidies and market barriers.

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.

Asian stock markets tumbled on the news, fearing renewed US-Chinese tensions that threaten global economic growth.

The broad-based S&P 500 also sank two percent to 2,646.13, while the tech-rich Nasdaq Composite Index shed 1.9 percent to 7,021.08.

The Embassy of the People's Republic of China in Canada said that it resolutely opposes Meng's arrest and demands her immediate release.

Beijing has asked Washington and Ottawa to "immediately release the detained person" and explain the reason for her arrest, said a foreign ministry spokesman, Geng Shuang.

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Meng's arrest was the highest-profile of the actions to date, and while the exact details of the arrest remain unclear the pattern paints a picture of an increased focus on China's economic actions across the United States government.

Trump's tariff hikes this year on Chinese imports stemmed from complaints Beijing steals or pressures foreign companies to hand over technology. But US officials also worry more broadly that Chinese plans for state-led creation of Chinese champions in robotics, artificial intelligence and other fields might erode US industrial leadership.

Sen. Ben Sasse, R-Neb., linked the arrest to the American sanctions against Iran.

Huawei, which sells more smartphones than Apple, is viewed by many as a national security and privacy threat due to its close links to the Chinese government. The company was banned in August from working on Australia's fifth-generation network.

Huawei, the world's biggest network equipment maker ahead of Ericsson and Nokia, has said Beijing has no influence over its operations. Huawei suppliers AAC Technologies (AACAY) and Sunny Optical (SNPTF) both plunged around 6%. In April, China appealed to Washington to avoid damaging business confidence following the Wall Street Journal report that U.S. authorities were investigating whether Huawei violated sanctions on Iran amid spiraling technology tensions. "However, even then, what Washington sees as an action against a company will be seen by Beijing as an action against the (Chinese Communist Party)".

USA authorities have been probing Huawei since at least 2016 for allegedly shipping US -origin products to Iran and other countries in violation of US export and sanctions laws, sources told Reuters in April.

Huawei is regarded as far stronger commercially than ZTE.

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In a statement, Huawei says Meng is being sought for extradition to face unspecified charges in the Eastern District of NY.

Huawei says the USA requested Meng's arrest and it is unaware of any wrongdoing.

Some element of calm was restored in Asia on Wednesday after supportive comments from Beijing - its first reaction to hopes a new trade agreement between the USA and China could be reached within a 90-day deadline.

Huawei has said it complies with all applicable export control and sanctions laws and USA and other regulations.

The arrest is related to violations of United States sanctions, a person familiar with the matter said, though officials have so far stayed mum on her allegations.

A foreign ministry spokeswoman, Hua Chunying, said then that China hoped the U.S. would refrain from taking actions that could further undermine investor confidence in the U.S. business environment and harm its domestic economy.

U.S. authorities in 2016 began voicing concerns that Huawei and others could install back doors in their equipment that would let them monitor users in the U.S. Huawei has denied those allegations.

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In addition to serving as CFO, Meng is the daughter of Huawei founder Ren Zhengfei and is the deputy board chair.

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