Effects of the trade war between the U.S and China have continued to destabilize markets around the globe. Several tech giants are already casualties of the volatility being witnessed.
In a move claimed to protect the U.S trade interest, President Donald Trump recently, slapped high tariffs on Chinese goods making way to the U.S market. The goods from China which are worth billions of dollars (approximately $50 billion) range from dishwashers to aircraft tires.
This brought tension among the two largest global economies who were soon on each other’s throats. Responding to the slapping of steep tariffs, Beijing vowed to hit back with levies of the same scale and strength including on crude oil. It quickly announced its own tariffs U.S goods worth around $35 billion. It also went ahead and threatened to cancel any previous deal it had entered with the Trump administration.
Chinese internet stocks suffer
This tug of war has had an effect on several markets hitting shares hard as investors reacted to last week’s escalation in the on-going war. Top Chinese internet stocks Alibaba Group (BABA), Baidu (BIDU) and BitAuto.com (BITA) were among the recent casualties on Monday as markets worldwide fell.
New York-listed shares in the e-commerce giant Alibaba fell by 5.3% to $191.25 on the stock market. Baidu, which is a leader in the internet search industry slipped to $250.41 recording a 3.3% drop, while BitAuto closed at 23.46 registering a 3.2% drop.
Others which fell are, JD.com (JD) which dropped to $39.18 being a 4% drop, 58.com (WUBA) plunged 9.9% to $70.56 and Momo (MOMO) which fell to 5.1% to $48.17.
Huya (HUYA) and iQiyi (IQ) dropped by 12.2% to $31.49 and 9.4% to $32.88 respectively. Before the onset of the trade war, many Chinese internet stocks had outperformed this year.
U.S tech stocks not immune
Even though the biggest losers so far appeared to be the Chinese internet stocks, experts have warned that even the U.S highest flying tech stocks are not immune to the trade tensions. An economist at Capital Economics, Ingvild Borgen Gjerde warned clients that while the FAANG stocks are on average, less directly affected by the rising trade restrictions than U.S tech firms in general, they remain highly cyclical and exposed to a slowdown in growth.
FAANG refers to Facebook Inc, Apple Inc, Amazon.com Inc, Netflix Inc, and Google parent Alphabet Inc.