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Shares in WeChat parent Tencent plunge after Trump issues ban order

Shares in WeChat parent Tencent plunge after Trump issues ban order

A logo of Chinese tech firm Tencent, owner of messaging app WeChat, is pictured in Beijing, China August 7, 2020. REUTERS/Thomas Peter

HONG KONG: Shares in the parent of Chinese social media giant WeChat tanked in Hong Kong on Friday (Aug 7) after Donald Trump signed an executive order banning Americans from doing business with the platform, citing national security concerns.

Tencent plunged as much as 10 per cent in morning trade before paring losses and ending down 5.04 per cent at HK$527.50, dragging the broader Hang Seng Index down 1.6 per cent.

READ: Trump issues orders for US ban on WeChat, TikTok in 45 days

The sweeping restrictions on the firm, which come into effect in 45 days, also cover ByteDance, the owner of popular app TikTok.

More than US$30 billion was wiped off Tencent's market capitalisation by the end of the day, with the firm having surged about 70 per cent since March as global tech titans benefited from stay-at-home orders aimed at containing the coronavirus.

READ: China accuses US of 'political suppression' over TikTok, WeChat ban

The move adds to a laundry list of issues that have ratcheted up tensions between the superpowers, including Hong Kong, Huawei and the spread of the virus.

"The US government is expected to follow up with more measures targeting Tencent," Steven Leung, at UOB Kay Hian (Hong Kong), said.

"Tencent's overseas expansion map now looks a bit uncertain, since some M&A deals, especially if its targets are based in the US, will face challenges."

WeChat, known as "weixin" or micro-message in Chinese, has grown to become ubiquitous in daily life across China since its 2011 launch and has more than a billion monthly users, who can also use it to hail rides and make payments.

Tencent is "reviewing the executive order to get a full understanding" of Trump's order, a company spokesperson said Friday.

Source: AGENCIES/gs

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