Shares of China’s biggest chipmaker and several of its largest pharmaceutical firms sank on Wednesday on fears that Washington will slap investment and export sanctions against more companies.
Wuxi Biologics Cayman Inc tumbled a record 25% in Hong Kong before paring losses, while Sino Biopharmaceutical Ltd dropped 5% at the close. Semiconductor Manufacturing International Corp, (Smic) which is already under sanctions, falls 6.4% on a report that the US is mulling tougher measures.
The proposal that’s being examined would tighten the rules on exports to Shanghai-based Smic, with the US National Security Council set to hold a meeting on Thursday, said people familiar with the matter. The Financial Times also reported that the Biden administration will place more companies on a blacklist, some of which are alleged to be involved in the surveillance of China’s Uyghur minorities.
It’s not clear why Chinese biotechnology companies
will also be on a Commerce Department list.
“It’s an extremely painful drop, and until we know more details it’s hard for us to take any action,” said Lin Cun, a fund manager at Shenzhen Senrui Investment Co. specialising in health-care, referring to the decline in Chinese pharmaceutical stocks. “All we can do is watch the losses for now.”
The declines dragged down Hong Kong’s benchmark Hang Seng Index, which fell 0.9%
as the region’s second-worst performer.
Chinese dronemaker DJI and AI giant Megvii Technology Ltd, which aren’t listed, will be added to the blacklist, the FT said, citing people
familiar. It also said supercomputing giant Dawning Information Industry Co or Sugon, and Yitu Technology, will join the Treasury Department’s
list of sanctioned Chinese
companies on Thursday.
American investors are barred from investing in companies bearing that label. The firms named were already on a separate blacklist that bans them from accessing American technologies.
The moves come days after Washington sanctioned SenseTime Group Inc over the alleged oppression of Uyghur Muslims in the Xinjiang autonomous region, forcing the AI leader to postpone its Hong Kong IPO. It threatens to escalate tensions between Washington and Beijing, who are tussling over everything from technology supremacy to human rights.
Secretary of State Antony Blinken, who is touring Asia this week, criticised China’s “aggressive actions” in the
region while laying out plans to more closely integrate the American allies and security partners.