Tencent Holdings jumped the most in two weeks 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.
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Chinese gaming and social media giant Tencent said second quarter net profit rose 37%, beating market estimates, on higher demand for its videogames as coronavirus-related lockdowns kept people indoors.
Donald Trump’s WeChat ban targets a celebrated Chinese innovation at the heart of the world’s largest mobile gaming and social media empire, threatening one of the more eye-catching stock rallies of 2020.
Tencent added to Friday’s sharp decline to start the week, helping lead weakness in technology shares after the US’s move to ban residents from doing business with the company’s WeChat app.
Tencent, one of Asia’s biggest companies, is little known beyond the tech world. But its WeChat super app has more than a billion users worldwide.
Index heavyweight Naspers dropped 4.4% after US President Donald Trump signed a pair of executive orders prohibiting US residents from doing business with the Chinese-owned TikTok and WeChat apps.
Washington’s plan to ban certain technologies of Chinese origin is a sign of “madness” in US secretary of state Mike Pompeo, China’s state-backed tabloid Global Times wrote in an editorial on Thursday.
The Trump administration’s move to ban US residents from doing business with Tencent’s WeChat app rippled through Chinese markets, erasing $46-billion from the Internet giant’s market value.
The Trump administration said on Wednesday it was stepping up efforts to purge “untrusted” Chinese apps from US digital networks and called TikTok and WeChat “significant threats”.
Tencent wants to merge China’s biggest game-streaming platforms, Huya and DouYu International, people familiar with the matter said, in a deal that would allow it to dominate the $3.4-billion arena.