According to a report by analysts at Standard and Poor's, the latest US sanctions package against the Chinese corporation Huawei could jeopardize about $ 25 billion in revenue from tech companies in the Asia-Pacific region.
Huawei is one of the largest smartphone manufacturers in the world, and the company has become hostage to a trade war between the United States and China. How will all this affect the tech business in Asia?
What happened
The US presidential administration in May pushed for a new rule that requires foreign companies that use American chip manufacturing equipment to obtain a special American license to sell certain semiconductors to Huawei and its affiliates. At the same time, there is no evidence that at least someone has received or will receive such a license in the foreseeable future.
Huawei needs such semiconductors to manufacture its smartphones and telecommunications equipment. The confrontation between the United States and China threatens about $ 25 billion in revenue of technology companies in the Asia-Pacific region, analysts at S&P have calculated. For example, the sanctions could cost Taiwan's Taiwan Semiconductor Manufacturing Co. up to 20% of revenue and up to $ 7 billion in money - the company uses American equipment and, under the new rule, will have to obtain US approval before making deals with Huawei.
Other companies in the region will suffer indirectly - these are legal entities that are somehow connected with companies that are directly affected by the new US ban on working with Huawei. The losses of such a business are estimated at $ 18 billion.
What are the claims of the US authorities
Earlier, the US government put Huawei on the entity list - a list of companies with which American organizations are prohibited from doing business without special permission. The American authorities are convinced that the activities of the Chinese telecom giant endanger the national security and interests of the United States.
In particular, the authorities believe that Huawei deliberately left in its hardware vulnerabilities, bookmarks that could be used for cyber espionage by the Chinese special services.
All this allowed the US authorities to urge their allies to stop using Huawei equipment to build next-generation 5G mobile networks. At the same time, the corporation itself completely denies accusations of ties with the Chinese intelligence services.
Not only Huawei
The US authorities are discussing restrictions not only for Huawei. Thus, the country continues to discuss a new initiative - Holding Foreign Companies Accountable Act. This bill obliges foreign companies to prove the fact that foreign governments do not own any stake in them. If this is not done, or American regulators are unable to conduct an audit, delisting, that is, the forcible withdrawal of a company's shares from trading on US stock exchanges, may become a punishment.
Analysts believe that the bill is mainly directed against Chinese companies like Alibaba and Baidu.
So far, the shares of Chinese companies Alibaba, Baidu and others are traded on American exchanges without restrictions. This means that you can buy them from Russia and you can without the need to open a separate brokerage account with foreign brokers. With the help of the foreign securities market of the St. Petersburg Stock Exchange, investors can buy 500 liquid shares of leading companies in all sectors of the world economy, including all shares of the S&P 500 index.
To carry out transactions with such shares, you need a brokerage account - you can open it online .
Read reviews, market analytics and investment ideas in the ITI Capital Telegram channel