Phone stocks feel the heat

Shares of handset related firms are expected to face pressure with Apple looking to relocate production from China to other parts of Asia, the removal of AAC Technologies (2018) from the benchmark Hang Seng Index, and Canada's ban on ZTE (0763) and Huawei products.

India and Vietnam, which are already sites of Apple production, are among the countries shortlisted by the company as alternatives, a report said.

Apple had last month forecast bigger supply problems as Covid lockdowns slowed production and demand in China.

The report said that Apple is citing China's strict anti-Covid policy and other reasons for its decision.

Meanwhile, Apple supplier AAC Technologies will be removed from the Hang Seng Index from June 13, according to the index's latest quarterly review.

This came as Canada last week said it plans to ban the use of China's Huawei Technologies and ZTE Corp 5G gear to protect national security, joining the rest of the so-called Five Eyes intelligence-sharing network.

"We intend to exclude Huawei and ZTE from our 5G networks," Industry Minister Francois-Philippe Champagne told reporters in Ottawa. "Providers who already have this equipment installed will be required to cease its use and remove it under the plans we're announcing today."

Champagne added that companies will be required to remove their 5G gear by June, 2024 and companies using their 4G equipment must be removed by the end of 2027.