It has been a rocky start for the Asian markets as Tencent has dragged the Hong Kong stock market down pointing to a six-week low.
The negative sentiment that brought about the markets was due to President Donald Trump signing an executive order to put TikTok and WeChat down. As of this writing, the Hang Seng Index has dropped over 40 points to start the week.
With the recent dominance of Tencent over Facebook, it looks like this stock drop may give a chance for Facebook to catch up.
Heavy losses at China’s technology sector amid Trump ban
Last Friday, the majority of Hong Kong’s top 30 tech stocks fell 2.5% after the official news of the POTUS signing the executive order.
The stock price for Tencent has been heavily battered losing over 10% since it reached its July 21 high at HK$564 [AU$101] per share now trading at HK$507.50 as of this writing.
A tweet from LA Times reporter Sam Dean tells us that Tencent’s gaming sector won’t be affected, only WeChat transactions. However, the ban could greatly impact future earnings.
Video game companies owned by Tencent will NOT be affected by this executive order!
White House official confirmed to the LA Times that the EO only blocks transactions related to WeChat
So Riot Games (League of Legends), Epic Games (Fortnite), et al are safe
— Sam Dean 🦅 (@SamAugustDean) August 7, 2020
However, Tencent will release its upcoming earnings report this week so investors are waiting in anticipation of the results.
Chinese firms may face problems before 2022
However, because of the ongoing U.S. and China tensions, it seems that Tencent isn’t the only one facing problems.
As per South China Morning Post, Apple suppliers also took a toll amid the ban of WeChat forcing the Chinese market to look for iPhone alternatives.
A bigger problem for Tencent and other Chinese companies is that they might face a risk of being delisted in the U.S. stock exchanges if they fail to meet audit standards by 2022.
Featured image courtesy of Jonas Lee/Unsplash