Shares in Chinese health and technology firms tumbled on Wednesday after a report that the United States will add more Chinese firms, including the largest commercial drone maker and biotech firms, to investment and export blacklists this week.
The Financial Times, citing two people briefed on the plan, reported that the United States will add eight Chinese companies, including leading global commercial drone manufacturer DJI Technology Co Ltd, to an investment blacklist on Thursday because of their alleged involvement in the surveillance of the Uyghur Muslim minority.
The US Commerce Department is also set on Thursday to place more than two dozen Chinese companies, including some involved in biotechnology, on an “entity list” restricting exports to them by US firms, the paper cited the sources as saying.
The report accelerated a sell-off in Chinese healthcare shares in afternoon trade, knocking 3.2% off a mainland index tracking the sector against a 0.87% drop in the broader index.
The impact was sharper still in Hong Kong, where the Hang Seng Healthcare Index was down 7.6% in late afternoon trade
Healthcare firms had already been under pressure on Wednesday after Chinese biotech company BeiGene Ltd plunged on its Shanghai debut on Wednesday, amid worries some Chinese companies could be ordered to delist from the US stock market.
The Financial Times said the US Treasury Department will put eight companies including DJI on its “Chinese military-industrial complex companies” blacklist on Thursday because of their alleged involvement in surveillance of the Uyghur Muslim minority.
U.S. investors are barred from taking stakes in companies on the list, which currently cites around 60 firms.
A DJI spokesperson declined to comment on the FT report, but directed Reuters to the company’s statement when it was added to the US Commerce Department’s “Entity List” a year ago for the same reasons. That listing prohibited the company from buying or using US technology or components.
At the time, DJI said it had done nothing to justify the move and it would continue to sell its products in the United States, where it has built up a large market.
The US Treasury did not immediately respond to a Reuters request for comment.
The new additions would come just days after artificial intelligence start-up SenseTime Group was placed on the same Treasury list, leading the company to postpone its $767 million Hong Kong initial public offering (IPO). SenseTime said the accusations against it were unfounded.
UN experts and rights groups estimate more than a million people, mainly Uyghurs and members of other Muslim minorities, have been detained in recent years in a vast system of camps in China’s far-west region of Xinjiang.
Some foreign lawmakers and parliaments have labelled the treatment of Uyghurs as genocide, citing evidence of forced sterilisations and deaths inside the camps. China denies these claims and says Uyghur population growth rates are above the national average.
The FT named the other companies being added to the list as image-recognition software firm Megvii, supercomputer manufacturer Dawning Information Industry, facial recognition specialist CloudWalk Technology, cyber security group Xiamen Meiya Pico, artificial intelligence company Yitu Technology and cloud computing firms Leon Technology and NetPosa Technologies.
The US government moves mean that American investors are barred from taking financial stakes in groups on the blacklist.
• Reuters with additional editing by Jim Pollard, George Russell.