Tencent, Chinese tech stocks fall after Trump executive order on TikTok, WeChat

President Donald J. Trump stops to talk to reporters as he walks to board Marine One and depart from the South Lawn at the White House in Washington on July 31, 2020.

Jabin Botsford | The Washington Post | Getty Images)

Shares of Hong Kong-listed Tencent plunged more than 4% during trade on Friday afternoon, after U.S. President Donald Trump issued executive orders targeting Chinese apps WeChat and TikTok.

WeChat is owned by Chinese tech giant Tencent, while short-video-sharing app TikTok’s parent company ByteDance is based in Beijing.

Other Chinese tech companies were not spared.

Shares of Semiconductor Manufacturing International Corporation in Hong Kong plunged 8.24%. Smartphone maker Xiaomi’s stock fell 3.77%, while Hong Kong-listed shares of telecommunications firm ZTE declined 3.65%. Chinese tech juggernaut Alibaba also saw its stock in Hong Kong declining 3.77%.

The Hang Seng Tech index, which tracks the 30 largest technology companies listed in Hong Kong that pass the screening criteria, also fell 3.37%. In mainland China, the Nasdaq-style start-up board Chinext slipped 2.828%

Trump on Thursday issued executive orders banning any U.S. transactions with Chinese tech firms Tencent and ByteDance. The ban will take effect in 45 days and could attract retaliation from Beijing

The repercussions of Trump’s order on Tencent may ring beyond just WeChat, China’s most popular messaging app. The Chinese tech juggernaut is also a titan in the video gaming space, with stakes in companies such as Activision Blizzard and Riot Games (the firm behind “League of Legends”).

The latest development comes as tensions between Beijing and Washington ratchet up, with prior tit-for-tat moves taken by both parties such as the closure of consulates in Houston stateside and the Chinese city of Chengdu.

U.S. Secretary of State Mike Pompeo said earlier this week that the Trump administration wants to see “untrusted” Chinese apps like WeChat and TikTok removed from U.S. app stores.

Pompeo detailed a new five-pronged “Clean Network” effort aimed at curbing potential national security risks and said because those apps have parent companies based in China, there were “significant threats to personal data of American citizens, not to mention tools for Chinese Communist Party content censorship.” 

Meanwhile, Microsoft is in talks with ByteDance to acquire TikTok’s business in the U.S., Canada, Australia and New Zealand within the next three weeks, ahead of a Sept. 15 deadline.

— CNBC’s Saheli Roy Choudhury contributed to this report.

Leave a Comment

Your email address will not be published. Required fields are marked *