Highlights
- The ban on WeChat App has struck the market value of the gaming company in the Hong Kong and Chinese stocks
- Previously, the Trump administration had banned the famous Chinese app – TikTok on the account of concerns regarding national security
- The U.S. President’s executive orders are worsening the relationship between U.S-China which will have a huge impact on numerous companies and economies
Trump Broaden Attack on Chinese App
U.S. President Donald Trump’s new executive order to ban the use of WeChat App by the residents has erased $46 billion from the Tencent Holdings market value. The order was issued Thursday night which has further undervalued the Chinese currency yuan.
The new orders have stoked up the ongoing trade war between the world’s superpowers which could have a huge impact on companies, economies, and markets.
The revised regulations will come into play within 45 days and restrict any transactions with the Chinese owners of the app.
The order reads: “The following actions shall be prohibited beginning 45 days after the date of this order, to the extent permitted under applicable law: any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd.”
Even though the order distinctively targets WeChat, other Tencent Holdings Ltd properties could be also affected.
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Tencent Loss through Chinese App
Tencent is one of the world’s largest gaming and social media companies with more than 1 billion users worldwide. Hence, although the move against the Chinese video service TikTok was not a big surprise, action against Wechat definitely was.
Trump’s orders banning a number of major Chinese applications results from the list of claimed threats posed by them including the alleged theft of intellectual property and spying which is until now denied by the Beijing authorities. The U.S. is also planning on toughening auditing rules for companies listed on American stock exchanges.
Earlier Trump has targeted Huawei and other tech companies over national security and human rights concerns. Now, he had taken another aggressive step against Chinese apps.
Other Mainstream Companies could be also Affected
The ban could be catastrophic for a large proportion of the gaming industry. Shortly after the announcement, Tencent shares in Hong Kong shares fell drastically. The company plunged more than 10 percent before cutting off at 6.8% at the midday break.
Tencent has significant shares in Tesla and Snap. The Chinese company has also dealings with NBA, NFL, and Major League Baseball. The order could possibly also affect international Tech giants Apple and Google.
