Technology

Tencent loses $46 billion as US moves to ban WeChat

The Donald Trump administration’s move to ban US residents from doing business with Tencent’s WeChat app rippled through Chinese markets, erasing US$46-billion from the Internet giant’s market value and sending the yuan to its biggest slump in two weeks.

The US president’s executive order, which also applied to ByteDance’s TikTok, fuelled concern that the deteriorating US-China relationship will weigh on companies, economies and markets. Confusion over the scope of the order led to volatile trading on Friday, with Tencent plunging more than 10% before paring its loss to 6.8% at the midday break.

Before Friday’s drop, Tencent was worth $686-billion, making it the world’s eighth-largest company by market capitalisation and bigger than Berkshire Hathaway Inc. Its huge size means it occupies a dominant position on global indexes. The firm accounts for more than 6% of MSCI Inc.’s developing nation gauge and 4% of its Asian Pacific measure.

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

Tencent ranked as the world’s biggest games publisher by revenue in 2019, according to Newzoo data. It also holds a large stake in Fortnite maker Epic Games and owns League of Legends developer Riot Games.

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