It didn’t take long for China’s market to react to President Donald Trump’s executive order banning WeChat.
Shares of Tencent Holdings Ltd., its parent company, fell as much as 10 percent Friday (Aug. 7) hours after the president prohibited Americans from using China’s popular social media app, The Wall Street Journal (WSJ) reported.
The president’s action Thursday (Aug 6) erased $35 billion from the internet giant’s market value. The company had a market capitalization of $687 billion before the order, Bloomberg News reported.
Tencent is listed on the Hong Kong Stock Exchange and was added to the Hang Seng Index in 2008.
The company reported $377 billion in revenues last year. The stock closed on Dec. 31 at $47.88 and has been on a wild ride. It opened Wednesday, Aug. 5, one day before Trump’s order at $72.41. That’s a 51 percent rise since the close of last year.
The president’s 1,000-word order, which is likely to fuel tensions between the U.S. and China, is scheduled to commence in 45 days. It bans Americans from using the app which, he wrote, “threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information… and continues to threaten the national security, foreign policy, and economy of the United States.”
The order also applies to TikTok, the video sharing app owned by ByteDance.
It’s unclear what kind of transactions would be affected, but the ramifications could be wide-ranging, The WSJ reported.
“The impact on Tencent will be very limited if the sanction is targeted only at WeChat, rather than a full-blown attack against Tencent’s business in the states,” Billy Leung, an analyst at Hong Kong-based Haitong International Securities Co., told the newspaper.
On Thursday (Aug 6), PYMNTS reported Microsoft’s initial interest in buying TikTok’s U.S. operations has expanded as the software and computer maker seeks to purchase the popular Chinese video-sharing app, not just its U.S. division.
The move comes as the Trump administration threatened to shut down TikTok’s U.S. operations over security concerns related to ties between its parent company, Beijing-based ByteDance, and the Chinese government.
“The escalating geopolitical tension between China and the U.S. is weighing on sentiment” and on technology stocks, Khiem Do, head of greater China investments at Barings in Hong Kong, told The WSJ.
A Tencent spokesperson said the company is reviewing the executive order to get a full understanding.
ByteDance wasn’t immediately available for comment Thursday night.
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