CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Lenovo, ZTE shares plunge following report on Chinese spy chips

The share price for Lenovo has been triggered by investor’s sentiment due to the firm's exposure in the sale of its goods in the US.

IG Analyst

Publication date : 2018-10-05T08:50:50+0100

ig_trading_floor_4

Chinese computer maker Lenovo saw its shares slump to around 20 percent on Friday morning, following a Bloomberg investigative report which uncovered evidence that showed that tiny chips in China-manufactured US computer equipment were stealing US technology secrets.

ZTE Corp, Chinese telecommunications firm also saw its shares shrink as much as 14 percent in early morning trading in Hong Kong.

As at 2.15pm, Hong Kong time, Lenovo was trading 14.60 percent lower, at HK$5.10, and was the third most traded stock for the day with a turnover of HK$1.72 billion on the Hong Kong Stock Exchange. ZTE shares also traded lower, down 10.42 percent, at HK$12.72.

The Bloomberg news article said its three-year secret investigation found that the chips – the size of a grain of rice each - were used on equipment made for Amazon, Apple, and possibly for other companies.

The chip allowed a “hardware-based” hack into computer equipment, which is usually harder to detect compared to a software hack, Bloomberg reported.

Based on the most recent fiscal year, three quarters or 75 percent of Lenovo’s revenue comes from outside of China, with more than 30 percent of contributions from North America.

Although the report did not reveal which Chinese tech firms were involved, analysts said the share price for Lenovo has been triggered by investor’s sentiment due to the firm’s exposure in the sale of its goods in that region.

In a response to queries from media outlets, Apple and Amazon said that they have never found any “malicious chips” in their systems.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer

Disclaimer:

All forms of investments carry risks and trading CFDs may not be suitable for everyone. CFDs are leveraged instruments and can result in losses that exceed deposits, so please ensure that you fully understand, and are aware of, the risks and costs involved. Refer to the Risk Disclosure Statement and Risk Fact Sheet.

IG Asia Pte Ltd (Co.Reg.No. 200510021K) is regulated by the Monetary Authority of Singapore and holds a capital markets services licence for dealing in capital markets products that are over-the-counter derivatives contracts and is an exempt financial adviser.

IG provides an execution-only service. The information in this advertisement does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of or solicitation for a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. You should consider your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

The information on this site is not directed at residents of the United States or Belgium and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

This advertisement has not been reviewed by the Monetary Authority of Singapore.