Источник изображения: Reuters

TikTok and WeChat problems crash the capitalization of Chinese companies by $ 75 billion

Yesterday, Donald Trump signed a decree banning American companies from interacting with ByteDance, which owns TikTok, and is effective 45 days later. Tencent’s WeChat will also be banned in the US. These actions led to a drop in the quotations of Chinese companies, in just a day their capitalization decreased by $ 75 billion.

Image source: Reuters

Image source: Reuters

The ban on WeChat directly affects Tencent’s interests to a lesser extent, since the scope of this messenger in the United States is limited mainly to the Chinese diaspora. But the Chinese company has other interests in the US market – it owns stakes in Tesla, Epic Games and Spotify. The stock price of Tencent on the Hong Kong floor after the news about Trump’s signing of the decrees fell by ten percent, although it managed to win back half of the fall by the end of the trading session. Taken together, the capitalization of Chinese tech companies fell $ 75 billion on Friday.

Alibaba and JD.com, which specialize in online commerce, did not stand aside. Their shares fell 6.7% and 5% respectively. Investors in this situation are frightened not by the consequences of specific Trump decrees, but by further uncertainty in relations between China and the United States. Tencent shares are up more than 40% since the beginning of the year, even after taking into account yesterday’s drop. Trump’s statements only served as a signal to investors to take profits, so a course correction could not be avoided. Stock indices of the technology sector on Chinese stock exchanges fell by an amount of 1.2 to 3%.

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