(Bloomberg) – Tencent Holdings Ltd. jumped the most in two weeks after they said White House officials had rumored U.S. companies that a ban on its WeChat app would not be as broad as scary.
The WeChat owner jumped as much as 4.2% in Hong Kong on Monday after people familiar with the matter said the Trump administration is privately seeking to include U.S. companies including Apple Inc. that they can still do business with Tencent’s WeChat messaging app in China. In recent days, senior administration officials have reached out to some companies, realizing that the impact of a sweeping ban on the popular app could be devastating for U.S. technology, retail, gaming, telecommunications and other industries, according to the people.
Read more: Trump Team trusts Apple, others over using WeChat in China
Corporate governance tried earlier this month to reassure investors that the executive order signed by President Donald Trump on August 6 could only apply to WeChat’s overseas operations. The ban, which came amid efforts by the White House to stem the rise of Chinese-owned technology giants such as Huawei Technologies Co. and TikTok owner ByteDance Ltd. all but $ 22 billion of those losses.
What Bloomberg Intelligence says
Intense lobbying by representatives of US companies such as Walmart, General Motors, Best Buy and Target reinforces WeChat’s indispensability to reach consumers in China. The impact of sales on Tencent of President Donald Trump’s WeChat ban may be minimal, as the administration seems to be limiting the scope of its mandate to protect U.S. businesses in China.
– Vey-Sern Ling and Tiffany Tam, analysts
Click here for the survey.
Spreads on Tencent’s dollar band by 2030 hit 2 basis points, according to credit traders in Hong Kong Monday morning, the most since August 11th.
Trump ignited a rage after signing the mandate to ban US entities from dealing with WeChat. Confidence reigned as investors wrestled with the whip language of Trump’s order – which halted “transactions” with the Chinese company – leaving the door open for the administration to expand it far beyond the service in America. Apple’s shares fell on fears the action could hurt the sale of iPhones in its largest market to the US
However, risks remain until details of the executive order are finalized. Senior administration officials are discussing the scope of the ban ordered by Trump, one of the people said, and the president could eventually pass on anything they decide.
Even if companies are allowed to do business with WeChat, individuals may still have restrictions on using the app in the US on Friday. A group of U.S. WeChat users filed a lawsuit in federal court in San Francisco on Friday in an attempt to block the Trump administration from banning the app, saying it would violate its rights.
(Adds Tencent’s bond in fifth paragraph.)
Please visit us at bloomberg.com for more articles like this
Subscribe now to stay ahead with the most trusted business news source.
© 2020 Bloomberg LP
