US clamp sends SMIC shares lower

Shares of Semiconductor Manufacturing International (0981) could fall by as much as 40 percent following US restrictions on exports to China's biggest chip maker, over alleged military ties, financial firm Morningstar forecast.

The Shanghai-listed shares of SMIC fell 7 percent yesterday while the Hong Kong-traded stock fell 3.88 percent to HK$17.86. Morningstar analyst Kaz Ito said SMIC's ability to introduce more advanced production nodes will be impaired if the ban is realized, as the overwhelming majority of its manufacturing equipment is sourced from the US, Japan and Europe. The institution maintained its target price at HK$23.

Credit Suisse lowered the target price from HK$22.50 to HK$17, with an estimate that the stock would underperform and Macquarie analysts also cut the valuation from HK$16.77 to HK$14.60.