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Last Thursday night, U.S. President Donald Trump released an executive order that would ban two widely used applications: TikTok and WeChat. Each parent company has a maximum of 45 days to decide whether they want to sell it or allow total restriction in the United States. WeChat is a popularly known messaging application used by millions worldwide and currently owned by Tencent.
Although the Trump administration claims that it aims to implement a “clean network” that protects each American citizen’s information and intellectual property through the restriction of any Chinese-made app, there are repercussions. Millions use WeChat to exchange messages with their loved ones in real-time, especially for those who have family and friends who reside in China.
It’s also important to note that Tencent is one of the most in-demand gaming companies worldwide. The company’s revenue continues to soar high, thanks to their mobile games and some US-based Riot games. They also have stakes with Supercell, Epic, and Activision Blizzard. Tencent is also a cloud provider and a music streamer, with a newly launched application similar to TikTok.
According to Andy Maynard, the blocking of WeChat in The United States will most likely not cause anything too severe for Tencent. Still, because of the wording of the executive order, “it can mean anything.” He added that the market is currently uncertain about the outcome of this plan to ban all Tencent Transactions. Maynard is a trader at China Renaissance in Hong Kong.
Tencent has been raking in more profit ever since the lockdown happened, with almost 40%. Despite the detrimental effects of the COVID-19 outbreak, Tencent retains its position as one of the most popular tech companies plus a market cap of more than $650 billion.
In a statement by Dickie Wong, he says that the U.S. President’s announcement is perfect for profit-taking” because, in the past month, Tencent’s share price increased dramatically. Wong is the head of research at Kingston Securities.
Amid the chaos, Wang Wenbin, the Ministry of Foreign Affairs, says that the U.S. President “is using national security as an excuse” to oppress Chinese businesses. He also accused Trump of “political manipulation and oppression.”