(Bloomberg) — 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.
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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., which is already under sanctions, fell 6.4% on a report that the U.S. is mulling tougher measures.
The proposal that’s being examined would tighten the rules on exports to Shanghai-based SMIC, with the U.S. 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 firms 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. specializing in health-care, referring to the decline in Chinese pharmaceutical stocks. “All we can do is watch the losses for now.”
Hang Seng Down
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 military-industrial complex 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.
Read: SenseTime Postpones Hong Kong IPO, Plans Updated Prospectus (1)
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, criticized China’s “aggressive actions” in the region on Tuesday while laying out plans to more closely integrate U.S. allies and security partners.
Read: House Approves Bill Targeting China Over Uyghur Forced Labor (1)
(Updates throughout)
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