The arrest of Huawei Chief Financial Officer Meng Wanzhou in Canada jolted market sentiment in Asia as investors assessed the economic and supply chain implications on an already-strained relationship between the U.S. and China.
Asian tech hammered by the arrest
Technology stocks across the region were under pressure, including many Huawei partners and suppliers.
Chipmaker Samsung tumbled 2.29 percent, Sunny Optical, which makes some of the lenses for Huawei phones, fell 5.47 percent and AAC Technologies declined 5.59 percent on the day. Chinasoft International, where Huawei is a strategic shareholder, dropped 11.71 percent.
Shares of Nikkei heavyweight SoftBank Group fell 4.93 percent. Last year, SoftBank and Huawei jointly demonstrated potential use of the next generation of high-speed mobile internet; SoftBank is taking its mobile unit public on Dec. 19.
Taiwan's major tech names also struggled: Catcher Technology fell 9.89 percent, Taiwan Semiconductor was down 2.65 percent, Largan Precision lost 9.94 percent and iPhone assembler Hon Hai dropped 3.63 percent. Asia's Apple suppliers, in general, saw Thursday declines.
Analysts at Jefferies pointed out that Huawei has a major global presence in various technology areas such as telecommunications equipment, semiconductors, smartphones and cloud computing. It also represents a major growth driver for many tech manufacturers.
Huawei's Meng, who is the daughter of the company's founder, faces extradition to the U.S., according to Canada's Department of Justice.
While the arrest represents a new escalation in American efforts to hold Chinese companies accountable for violation of U.S. laws, it is likely to elicit an angry reaction from Beijing, according to Eurasia Group.
"The investigation of Huawei could be a prelude to further action against the firm and its senior officials," the Eurasia Group analysts said, adding that if the U.S. places a sudden ban on Huawei equipment, like it did with ZTE, the impact would be much greater.
"Huawei equipment is more widely used (than ZTE is) by carriers around the world, including in Europe and Africa," they said.
ZTE shares listed in Hong Kong were down 5.94 percent on the day.
Both Huawei and ZTE are restricted from selling telecoms equipment in the U.S. due to what the U.S. describes as national security concerns.
Widespread sell-off in Asia Pacific
The sell-off in the technology sector was part of broader declines across Asia's major indexes. Japan's Nikkei 225 fell 417.71 points, or 1.91 percent, to 21,501.62. In South Korea, the Kospi lost 32.62 points, or 1.55 percent, to 2,068.69.
In the Greater China region, Taiwan's Taiex fell 232.02 points, or 2.34 percent, to 9,684.72. Mainland shares were also down: The Shanghai composite sunk 44.62 points, or 1.68 percent, to 2,605.18 while the Shenzhen composite fell 30.02 points, or 2.17 percent, to 1,350.75. Hong Kong's Hang Seng index was down 2.47 percent to close at 26,156.38.
Those moves contributed to MSCI's Asia Pacific ex-Japan index falling 1.86 percent.
Australia's ASX 200 fell 10.7 points, or 0.19 percent, to 5,657.7. That followed after the country's trade surplus for the month of October missed forecasts, coming in at around 2.3 billion Australian dollars (approximately $1.67 billion) instead of the expected 3.2 billion Australia dollars (roughly $2.32 billion) from a Reuters poll.
Meanwhile, futures pointed to substantial declines for the U.S. market. Dow Jones Industrial Average futures showed an implied decline of 267 for the index at Thursday's open, as of 2:19 a.m. ET Thursday. S&P 500 and Nasdaq futures also pointed to declines. The U.S. stock markets were closed on Wednesday in honor of former president George H.W. Bush.
OPEC meets to discuss supply policy
Also on investors' radar is the meeting between the oil-producing cartel OPEC and other top suppliers. They're set to meet later Thursday in Austria, with a series of issues on the line.
Chief among those is the discussion surrounding crude output policy.
A combination of underestimating how much oil Iran would be able to sell, along with continued record output from the U.S., has sent prices tumbling. November posted the biggest monthly drop in a decade.
In a morning note, Ray Attrill, head of foreign exchange strategy at National Australia Bank, said the "focus has been on oil, where the preliminary meetings ahead of the formal OPEC discussions today indicate agreement to some sort of production cuts with as yet no agreement on how much (1.1mn is one figures being bandies bout)."
The alliance's policy of capping output has drawn Trump's ire because the president wants fuel costs to fall at U.S. gas stations. Throughout the year, Trump has publicly blamed OPEC for rising oil prices and ordered the group to take measures to reduce the cost of crude.
Oil prices were lower on Thursday ahead of the meeting. The global benchmark Brent crude futures contract declined by 0.84 percent to $61.04 per barrel while U.S. crude futures slipped 1.04 percent to $52.33 per barrel.
Shares of oil-related companies in the region were lower.
Japan's Inpex fell 0.87 percent and Fuji Oil was down 2.43 percent. South Korea's S-Oil slipped 2.68 percent while SK Innovation declined 3.77 percent. Chinese oil names listed in Hong Kong and Shanghai were also down.
US-China trade agreement
Amid confusion over what Trump and Chinese President Xi Jinping actually agreed upon at the G-20 summit in Argentina last weekend, a former governor of the People's Bank of China told CNBC that the two economic powerhouses can make progress on their trade differences within 90 days.
"I see there is a pretty high possibility to reach some sort of success during the 90-day negotiation window," Zhou Xiaochuan, a former PBOC governor, told CNBC's Geoff Cutmore at the Boao Forum and Ambrosetti Meeting in Rome, Italy.
The U.S. has hit $250 billion of Chinese goods with tariffs since July, while China has retaliated by imposing duties of its own on $110 billion of American products. The trade conflict between Washington and Beijing has continued to rock global markets for much of 2018.
At a post-G-20 summit meeting in Argentina last weekend, Trump agreed not to boost tariffs on Chinese goods from 10 to 25 percent on Jan. 1, as he'd previously threatened. In exchange, the White House claimed that China would buy a "very substantial" amount of agricultural, industrial and energy products.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.094 after reaching an earlier high of 97.148.
— Reuters and CNBC's Brian Sullivan, Tom DiChristopher and David Reid contributed to this report.
Correction: An earlier version of this report misstated the time frame in which the Nikkei 225 fell 1.7 percent.