MORRISVILLE – Tech giant Lenovo is now “the world’s worst tech stock” as its value continues to drop on a major world stock exchange in Hong Kong.

So says global news service Bloomberg in a report early Monday.

Lenovo could be removed from the prestigious Hang Seng Index. Think of it as the Dow Jones of Asia.

Primarily based in China, its stock is traded in Hong Kong, and it operates one of two global headquarters in Beijing. The other is located in Morrisville. Shares traded at $3.77 in Hong Kong dollars Monday, significantly below its high of $5.21 but above its $3.58 low over the last 52 weeks. (Hong Kong dollars are worth 13 cents, according to exchange information Monday morning.)

The firm “is increasingly at risk of being dropped from Hong Kong’s benchmark equity index as its shares tumble more than any other technology company in the world,” Bloomberg’s Jeanny Yu reported.

Lenovo shares fell to their lowest level since 2009 and are down more than 50 percent since March 2013, Bloomberg said.

The plunge has erased nearly $6 billion in value.

Shorting the stock

Some investors also see Lenovo’s value dropping further, thus shorting the stock.

“The stock is one of the most shorted on the Hang Seng Index: 13.8 percent of its shares available for trade on loan to short-sellers, according to IHS Markit Ltd.,” Yu wrote in a second report about Lenovo’s troubles. 

Citing increasing “jitters” about Chinese tech firms’ trade with the US, including a banning of phone equipment maker ZTE, investors are wary of Lenovo and others, the news service reported. The FCC also has targeted China tech giant Huawei over concerns about its telecom gear.

“Chinese tech companies, such as Huawei Technologies, Lenovo Group, Xiaomi, Oppo and Vivo could also be hit hard if the U.S. expands similar bans to them, as they still need to use various chips and critical components provided by U.S. vendors,” reported Nikkei Asian Review.

Lenovo recently pointed out to WRAL TechWire that “there is no ban on any Lenovo products by the Department of Defense or any agency within the U.S. Government.”

“Our security strategy ensures appropriate industry-standard security controls exist within product design, manufacturing, and opertions. Lenovo respects all agreements, laws, regulations and privacy standards, and has adopted and follows international standards – ISO 9001, ISO 14001, and ISO 2700 to meet quality, service and security objectives,” Lenovo added.

“All five of Lenovo’s acquisitions of US IT businesses since 2005 – including most recently the x86 server line from IBM – were approved by the committee on foreign investment in the United States (CFIUS), making us one of the most extensively vetted technology companies in the world.”

Whatever security concerns or fallout from the ongoing China-US trade dispute there might be – if any – Lenovo also is suspect because of its recent struggles, especially in server sales (it’s server group is based in Research Triangle Park) and smartphones.

“Risks that Lenovo will lose its seat are on the rise,” Kenny Wen, a strategist at Everbright Sun Hung Kai Co. in Hong Kong, told Bloomberg. “Lenovo is having trouble in all key areas, from issuing cool smartphone models to keeping market share in computer businesses. The short-sellers may have picked the right target this time.”

Yang’s pep talk

Global sales for PCs in the first quarter showed Lenovo continuing to tread water, according to research firms Gartner and IDC.

Yang Yuanqing

The continuing decline in Lenovo’s stock continues despite positive talk from Chairman and CEO Yang Yuanqing. In Raleigh last week meeting with some 1,000 employees, Yang insisted the worst was over for the company. The pep talk was part of Lenovo’s annual global tour to meet with its workers as part of what the company calls “kickoff” events. He continued his positive tone in later stops in Europe and in China.

“We have passed Lenovo’s most difficult period,” Yang told the Raleigh crowd.

Looking ahead, Lenovo must like a “beast” that has been starved, so that “we can pounce and make gains,” Yang added.

Yet critics aren’t backing off.

“Last year was supposed to be the year for Lenovo to hit the bottom and start seeing improvement. But we didn’t see it,” another analyst. “Investors are losing patience.”

The company told Bloomberg it wouldn’t comment on the stock story.

Being dropped from the Hang Seng Index wouldn’t be a first for Lenovo. Bloomberg notes Lenovo also was removed in 2006 then returned in 2013.