Late Wednesday, news broke that the CFO of Huawei, a leading smartphone maker, was arrested in Vancouver.
TheStreet reported that Meng Wanzhou, the CFO of China's Huawei Technologies and the daughter of the company's founder, was detained in Vancouver on December 1 and faces extradition to the United States amid reported allegations that she assisted the company in evading U.S. sanctions on Iran. News of the arrest, which only came to light late Wednesday, sent global stocks into a tailspin and hammered U.S. semiconductor stocks linked to the world's second-largest smartphone maker and the world's biggest semiconductor market.
"The US already has a low-key conflict simmering with the Chinese tech giant and has, alongside New Zealand, already blocked Huawei from selling their 5G technology in the country for fear that it could be used for malicious purposes," said Fiona Cincotta, a market analyst with London-based financial bookmaker City Index. "The latest arrest will be seen as a heavy slap in the face in China."
Huawei said it had been provided "very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng" in a statement to the media, while China officials in its Canadian embassy said it "firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim."
Jim Cramer weighs in on the scandal and also breaks down what stocks investors should look at when there's a scandal involving an executive of a public company.