By invoking his emergency economic powers, President Trump issued executive orders that prohibits US firms from doing business with TikTok and WeChat, two of China’s popular social media apps believed to be a threat to their national security. The order, which takes effect in 45 days, caused Tencent (owner of the messaging service WeChat) stocks to plummet after it was announced.
Financial Times: Trump’s TikTok and WeChat order wipes $100bn off China tech stocks
Financial Times reported that Tencent shares fell as much as 10.1 per cent in Hong Kong after Mr Trump issued an executive order that gave US companies 45 days to halt transactions with its WeChat app. A separate order targets transactions with ByteDance’s hugely popular video-sharing platform TikTok.
Equity traders said the broad scope of Mr Trump’s statements left open the possibility that the US could bar all dealings with Tencent and ByteDance. That could potentially deliver a serious blow to Tencent’s US gaming business. The company also owns stakes in companies including electric car maker Tesla, games group Epic Games and music streaming business Spotify.
Financial Times further states that the losses extended beyond the companies named in the bans. Chinese internet groups Alibaba and JD.com fell as much as 6.7 per cent and 5 per cent, respectively. ByteDance, which has been in talks with Microsoft over a mooted sale of TikTok’s business in the US and elsewhere, is not listed on the stock market.
South China Morning Post: Hong Kong stocks slide as US clampdown on Chinese apps hits Tencent, other tech shares
In a related news, South China Morning Post said Tencent fell as much as 10 per cent, before narrowing its loss to close down by 5 per cent, as Trump’s ire turned to Chinese apps.
Other tech stocks in addition to Tencent dropped, with the two-week-old Hang Seng Tech Index tumbling 2.5 per cent. It narrowed the loss later to 2.6 per cent. It had been down as much as 5.7 per cent.
Alibaba, the e-commerce giant and owner of the South China Morning Post, dropped 3 per cent, smartphone maker Xiaomi fell 3 per cent and lens manufacturing Sunny Optical slid nearly 2 per cent.
The Hang Seng Index fell as much as 3 per cent, but trimmed the loss to close 1.6 per cent lower at 24,531.62.