Chinese tech giant Huawei and its American suppliers saw their shares rise significantly on Monday following trade talks between Chinese President Xi Jinping and U.S. President Donald Trump.
Shares for Foxconn, a manufacturing company that makes smartphones for disgraced technology company Huawei, jumped 1.6% Monday in Taiwan. Foxconn Industrial Internet, a subsidiary that partners with Huawei, rose to the maximum daily limit of 10% Monday in Shanghai, CNN Business reported Monday.
Trump and Xiping met to discuss trade between the U.S. and China at the G-20 Summit in Osaka, Japan, over the weekend after Trump threatened to implement additional U.S. tariffs on $300 billion worth of Chinese imports and duties of up to 25% on remaining untaxed Chinese goods if Xi refused a discussion.
The president then revealed on Saturday at the summit that “U.S. companies can sell their equipment to Huawei” in an attempt to ease trade tension between the U.S. and China.
📱 "We send and we sell to Huawei a tremendous amount of product that goes into the various things that they make, and I said that that's ok."
— Bloomberg Quicktake (@Quicktake) June 29, 2019
Other companies that partner with Huawei also saw shares rise, including Chinese optical firm company Ningbo Exciton Technology, which gained 5.4%; contract chipmaker TSMC, which gained 4%; and chipmaker Unisplendour, which gained 6.4%.
American companies that supply material to Huawei, such as Intel (), Qualcomm ( ), Broadcom ( ) and Micron ( ), also saw shares rise in premarket trading. The Dow ( ) was up 1.1%, and the Nasdaq ( rose 1.7%. The S&P 500 ( ) gained 1.2%, according to CNN Business.
“Financial markets are showing their relief,” Brock Silvers, managing director of China-based private equity firm Kaiyuan Capital, told Bloomberg. “Equities are up broadly, and Huawei suppliers, in particular, are showing renewed confidence. … Celebration may be premature, as Trump can easily reinstate his Huawei ban should trade talks falter. While both parties clearly want a deal, we’ve yet to see any evidence that remaining issues are any closer to be resolved.”
Trump signed an executive order to ban U.S. Huawei sales in May due to national security concerns after the U.S. Department of Justice charged the company for bank fraud, wire fraud and violating Iran sanctions. Huawei CEO Ren Zhengfei said the blacklisting move would cost the company $30 billion in revenue.
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