US efforts to boost biotech industry lead to China selloff

The latest US effort to reduce reliance on China is striking hard at the Asian nation’s biotech stocks, as investors price in more indications of decoupling between the world’s two biggest economies.
Following US President Joe Biden’s executive order to bolster domestic bio-manufacturing and cut reliance on foreign companies, bellwether Chinese stocks such as $WUXI BIO(02269.HK)$ Wuxi Biologics Cayman Inc. and $WUXI APPTEC(02359.HK)$ WuXi AppTec Co. tumbled at least 16% Tuesday in Hong Kong.
Coming on the heels of US export curbs of advanced chips to China, the latest Biden order underlines stiffening strategic competition between the two nations and adds to the selling pressure on Chinese stocks. With the Asian nation also manufacturing a host of industrial and high-tech products, there are questions over what other sectors may be affected next.
“I think market hasn’t fully priced in such a risk of Sino-US conflicts. That’s why healthcare firms are plunging today,” said Paul Pong, managing director at Pegasus Fund Managers Ltd. “Competition between China and the US in areas including aerospace, AI manufacturing remains fierce and it wouldn’t surprising to see sanctions by US.”