Trump Bans Huawei from US Techs, SET Unable to Recover, Plunging 2.4% since Tariffs Hike

Trump declared a national emergency to protect US computer networks from "foreign adversaries" while SET plunged 2.4% since tariffs hike on May 10.

Breaching National Security has the same severity as attacking the country with firearms. The U.S., especially President Donald Trump, has been claiming nonstop that the Chinese No.1 tech company, Huawei Technologies, has been spying its users’ activities through the devices.

 

On May 15, 2019, Trump had declared a national emergency to protect US computer networks from “foreign adversaries“. The orders barred US companies from using foreign telecoms which believed to pose national security risks. The target of the orders was clear, even though there were not specify directly to Huawei.

Moreover, the US commerce department added Huawei to its “entity list” – a move that bans the company from acquiring technology from US firms without government approval.

 

In Huawei’s statement, it claimed that this was an “unreasonable restrictions” while asserted that the company is independent from the Chinese government.

“Restricting Huawei from doing business in the US will not make the US more secure or stronger. Instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers,” said Huawei in the statement.

 

Despite the criticism from Trump on the matter, he has never actually banned the use of foreign telecommunication equipment.

Analysts asserted that the move was Trump’s intention to pressure China for the trade deal after the escalation between the two countries over a week before that Trump levied 25% tariffs on Chinese products worth $200 billion, then tried to impose on all Chinese product, which led to the retaliation from Beijing by imposing 25% tariffs on $60 billion worth of US goods.

 

Since May 10, the day that 25% tariffs on Chinese products were imposed, SET Index (white line) has plunged 2.4% from 1,645.6 points to 1,605.0 points while China Composite (pink line) was able to rebound on the day of levy due to jump-in of government-back funds. Dow Jones (green line) recovered the plummet on May 13, which was the next trading day after the report from several analysts that investors were hoping to see the deal and the negative sentiment was already priced-in.

Source: Bloomberg

 

While investors cling on the hope of the next negotiation between Chinese and US delegates, there is no report on the next visit of US representatives to Beijing.

Trump said that he will meet with Chinese President Xi Jinping at G20 Summit in Osaka on June 28-29.

Some expect that there will be a dinner talk again between Trump and Xi, wishing that both will agree to take a step back while some see that the dinner talk would not help much in this situation, and the deal must be achieved as soon as possible.