After U.S President Donald Trump signed an executive order that bars U.S.entities from transacting on WeChat, the shares of the Chinese tech giant Tencent Holdings fell 6.8 %
The ban comes into effect in 45 days beginning August 6.
This is the most significant drop in shares for this company that introduced the hugely popular social media behemoth, The Wall Street Journal reported.
WeChat is a messaging, social media, and electronic payment application owned by Tencent Holdings Ltd. This is company is also one of the major producers of motion pictures in Hollywood with films like Terminator: Dark Fate and the much anticipated “Top Gun: Maverick in its kitty.
Tencent’s shares, which are listed in Hong Kong, plunged as much as 10% but slightly recovered to 6.8%. Tencent shares were trading near a record high before Trump barred U.S entities from transacting on WeChat. The company’s market capitalization had been close to that of Facebook Inc and it is China’s second-most valuable listed company after Alibaba Group Holding Ltd.
The latest decision by Trump, who many see fighting an uphill battle to win reelection amid the Wuhan virus is to stop the spread in the United States of mobile applications developed and owned by the companies in China. This has been seen as a threat to the national security, foreign policy, and economy of the country.
Trump order stated, “Like TikTok, WeChat automatically captures vast swaths of information from its users – threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information,”.
“WeChat also captures the personal and proprietary information of Chinese nationals visiting the United States, thereby allowing the Chinese Communist Party a mechanism for keeping tabs on Chinese citizens who may be enjoying the benefits of a free society for the first time in their lives” the order stated.
Tencent is the world’s largest video game company and it also has Chinese cinema’s global ambitions in mind and has plans to produce more films with Chinese cultural content.