Tencent inventory plummets after Trump broadcasts plan to ban WeChat …


Shares in Tencent plummeted as much as 10% in Hong Kong, before paring back some of those losses — though the stock was still down nearly 6% by early afternoon. Hong Kong’s benchmark Hang Seng Index (HSI) fell 2.3%.

The fall came after Trump issued executive orders that would ban WeChat and TikTok, the short-form video app owned by Beijing-based ByteDance, from operating in the United States in 45 days if they are not sold by their parent companies. Trump had already said that he would ban TikTok if a deal for the app is not reached with an American company, but the inclusion of WeChat indicates that Washington is broadening its efforts to restrict some Chinese apps from operating in the United States.

About Tencent
Tencent Holdings Ltd is a global multinational conglomerate holding company founded in 1998, whose subsidiaries specialise in various Internet-related services and products, entertainment, artificial intelligence and technology globally. Its twin-skyscrapers headquarters Tencent Seafront Towers (also known as Tencent Binhai Mansion) are based in Nanshan District, Shenzhen.
Tencent is the world’s largest video game company, one of the world’s most financially valuable companies, one of the world’s largest social media companies, and one of the world’s largest venture capital firms and investment corporations. Its services include social network, music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games. Offerings in China include the instant messengers Tencent QQ and WeChat, and one of the largest web portals, QQ.com. It also owns the majority of Global’s music services (Tencent Music Entertainment), with more than 700 million active users and 120 million paying subscribers.
The company surpassed the market value of US$500 billion in 2018, becoming the first Asian technology company to cross the valuation mark. It has since then emerged as one of Asia’s most valuable companies, and among the world’s top technology companies by market value. Tencent has been credited as one of the world’s most innovative companies by numerous media and firms. As of 2018, Tencent has the 5th highest global brand value.Tencent controls hundreds of subsidiaries and associates in numerous industries and areas, creating a broad portfolio of investments across a diverse range of businesses. It has stakes in over 600 companies, and recent focus on tech start-ups in Asia.

Tencent stock plummets after Trump announces plan to ban WeChat …

About plummets

A WeChat ban would be a blow to the Chinese diaspora, students and others in the United States who rely on the app to communicate with family, friends and business partners in China.

WeChat is the overseas version of Tencent’s widely popular Chinese messaging app Weixin. The app provides a range of services, including instant messaging and the ability to send money to other users.

Tencent stock plummets after Trump announces plan to ban WeChat …

According to the order, a ban would apply to “any transaction that is related to WeChat” made by any person or “any property” subject to the jurisdiction of the United States.

Tencent, which did not immediately respond to a request for comment, reported in March that Weixin and WeChat have nearly 1.2 billion monthly active users. The company does not disclose user numbers by country, but industry analysts say the vast majority of them are on Weixin in China.

The flurry of executive orders have “spooked Asia,” wrote Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a Friday note.

“It highlights the challenges Chinese companies will have, emerging internationally from behind the great firewall of [China’s] protective cocoon,” he added.

Trump’s ban is so far mostly symbolic, given the small market share WeChat has in the United States.

Trump administration wants to purge Chinese tech from US networks

But if it expands into popular gaming apps operated by Tencent, that could be a problem.

More than half of Tencent’s revenue last year came from so-called Value Added Services (VAS), which include the company’s lucrative portfolio of online games. Financial services and payment apps such as WeChat Pay contributed about 25% of revenue, and just under 20% came from online advertising.

Tencent operates many popular mobile gaming apps, such as PlayerUnknown’s Battlegrounds, or PUBG. US-based players spend a lot of money in PUBG — it ranked 10th in the United States by consumer spend last year, according to analytics company App Annie.

Tencent could lose the United States as a market for its mobile games if the ban on Chinese apps is expanded, which appears to be the Trump administration’s intent.

US Secretary of State Mike Pompeo on Wednesday said that “untrusted Chinese apps” should be removed from US app stores. He did not provide further detail as to how the sweeping restrictions would be implemented, or whether they would require the support of private companies.

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