Chinese Indexes Advance on Easing Restrictions on Huawei

The United States eases restrictions on Huawei

Given the new (mostly negative) trade war drama that’s been unfolding every day for the last couple of weeks, it was like a breath of fresh air when the United States temporarily eased certain restrictions on Huawei to avoid disruptions to the Chinese tech giants’ existing customers.

Huawei will now be authorized to purchase American equipment to maintain its existing network and provide software updates to users. However, the company is still banned from purchasing American goods to make new products.

Chinese Indexes Advance on Easing Restrictions on Huawei

As we reported yesterday, Google revoked its business with Huawei in connection to the ban on Huawei imposed by the Trump administration. Other companies were also considering stopping business with the Chinese company. However, we expect these companies to trade with Huawei while staying within the limits set by the government.

Shanghai Composite recovers 

The mainland Chinese indexes rose on the news. After ending last week—and starting this one—in the red, the Shanghai Composite Index recovered, gaining 1.23% in May 21 trading. The tech-focused Shenzhen Composite Index outperformed the Shanghai Composite by posting a 1.92% gain.

Your ETFs

The iShares MSCI China ETF (MCHI) extended its 3.21% May 17 loss with a 2.9% loss on May 20. Meanwhile, the iShares China Large-Cap ETF (FXI) lost 1.37% yesterday and was up 0.69% in today’s premarket trading at 4:31 AM EDT. The technology-focused KraneShares CSI China Internet ETF (KWEB) remained steady on May 17 but fell a massive 4.5% yesterday. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) lost 0.92% on May 20 but was up 1.55% in today’s premarket trading at 4:17 AM EDT.