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HONGKONG-CHINA-STOCKS-IT-ESPIONAGE
Lenovo, ZTE shares pummelled in Hong Kong after microchip report
HONG KONG, Oct 5, 2018 (BSS/AFP) – Shares in two mainland Chinese tech
giants were hammered on Friday after a report said Beijing had used
microchips inserted in US computer goods as part of a drive to steal
technology secrets.
Bloomberg News said the tiny chips were place in gadgets made for Amazon
and Apple, and possibly for other companies and government agencies.
In morning Hong Kong trade PC maker Lenovo tanked more than 17 percent,
while telecoms equipment maker ZTE plunged 11.4 percent.
“Electronics produced in China may be viewed unsafe due to this news, and
tech shares are falling in general because of that,” said Ray K W Kwok, an
analyst at CGS-CIMB Securities Hong Kong.
With around a third of its revenue coming from North America, Lenovo could
be in particular trouble.
And ZTE was already struggling to recover its losses for the year after
collapsing 40 percent in June in response to a Washington decision to ban US
companies from selling crucial hardware and software components to it for
seven years.
While the ban was eventually lifted after it agreed to pay a huge fine,
its share price remains subdued.
“The hack report has nothing to do with Lenovo, but since Lenovo sells PCs
and servers there, some investors may have concerns on a sentiment level,”
Dennis Guan, a senior analyst at eFusion Capital. “It’s just too hard to
predict how things will develop.”
The sell-off comes as tech firms around the world struggle on profit-
taking following a healthy rally in recent years.
The report added to already tense relations between the world’s top two
economies as they slug out a trade war that has seen them impose tariffs on
hundreds of billions worth of goods.
Vice President Mike Pence added to the uncertainty by accusing Beijing of
military aggression, commercial theft and rising human rights violations,
while saying it was bent on interfering in upcoming US elections.
“There can be no doubt — China is meddling in America’s democracy,” he
warned.
BSS/AFP/HR/1045