Tencent up on talks of narrower US WeChat ban
Trump administration said to be privately seeking to reassure US companies they can still do business with the messaging app in China
Hong Kong — Tencent jumped the most in a month after White House officials are said to have reassured American businesses that a ban on its WeChat app won’t be as broad as feared.
The WeChat owner rallied 5.8% at the close in Hong Kong on Monday, making it the best performer on the benchmark Hang Seng index, after people familiar with matter said the Trump administration is privately seeking to reassure US companies including Apple that they can still do business with Tencent’s WeChat messaging app in China.
In recent days, senior administration officials have been reaching out to some companies, realising that the impact of an all-out ban on the popular app could be devastating for US technology, retail, gaming, telecommunications and other industries, according to the people.
Company management earlier this month sought to reassure investors that the executive order signed by President Donald Trump on August 6 may apply only to WeChat’s overseas operations. The ban, which came amid efforts by the White House to curtail the rise of Chinese-owned technology giants such as Huawei Technologies and TikTok owner Bytedance, had erased roughly $66bn from Tencent’s value, though Monday's rebound means the stock has recouped all but $9bn of those losses.
Intense lobbying by representatives of US businesses such as Walmart, General Motors, Best Buy and Target reinforces the indispensability of WeChat for reaching consumers in China. The sales impact on Tencent from President Donald Trump’s WeChat ban may be minimal as the administration appears to be narrowing the scope of the order to protect US businesses in China.
Spreads on Tencent’s dollar bond due 2030 tightened two basis points, according to credit traders in Hong Kong on Monday morning, the most since August 11. Shares of Prosus, the Naspers unit that holds 31% in Tencent, gained as much as 3.6%, while Naspers climbed 2.9%.
Trump ignited a furore after signing the order to ban US entities from dealing with WeChat. Confusion reigned as investors grappled with the sweeping language of Trump’s order — which bars “transactions” with the Chinese company — that leaves the door open for the administration to extend it well beyond the service in the US. Apple’s shares fell on fears the action could hurt sales of iPhones in its largest market after the US.
Still, risks remain until details of the executive order are finalised. Senior administration officials are deliberating over the scope of the ban ordered by Trump, one of the people said, and the president could ultimately overrule anything they decide.
Even if corporations are permitted to do business with WeChat, individuals may still face restrictions on using the app in the US group of US WeChat users filed a complaint at the federal court in San Francisco Friday in an attempt to block the Trump administration from imposing a ban on the app, saying it would violate their rights.
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