Chinese giant Tencent loses $35 billion after Trump's ban
What's the story
A few hours ago, US President Donald Trump signed an executive order banning certain business transactions with Tencent, the Chinese conglomerate that owns WeChat messaging service.
Now, a report in Bloomberg suggests that the move, and some initial confusion stemming from it, marked a big blow for Tencent's stock in Hong Kong and erased billions of dollars from its market value.
Here's more.
Order
Order comes into effect in 45 days
The EO signed by the President comes into effect in 45 days, which means American residents and entities have less than two months to wrap up the prohibited business transactions with the Chinese company.
Notably, a similar order has also been signed to stop transactions with ByteDance, the Chinese firm that owns video-sharing service TikTok and is in talks with Microsoft for selling it.
Effect
Tencent's shares plunged by over 10%
When the President announced the order, Tencent's shares in Hong Kong plunged by 10.1%.
The decline came as the wording of the order led many to believe that Tencent was being blocked completely out of US, a country it is heavily vested in.
Tencent owns Riot Games and holds a large stake in Spotify, Universal Music Group, Snap, Activision Blizzard, EA, and Epic Games.
Information
Tencent Pictures is also behind many popular movies
Along with this, Tencent Pictures, the production arm of the conglomerate, is behind several American flicks, including Wonder Woman, Top Gun: Maverick, Terminator: Dark Fate, and Venom.
Clarification
Post clarification, stocks recovered a little
As the confusion grew, a US official clarified that the scope of the ban is solely limited to transactions involving Tencent's WeChat messaging app and its payment services.
Following this, the company's stock managed to trim down the losses to 4.3% by 1:53 pm local time. However, overall, this entire debacle is estimated to have caused a loss of $35 billion to the company.
Scale
Tencent is among world's largest companies by market value
Although the loss is huge, it is not something that Tencent cannot bear.
The company sits among the world's largest companies by market cap and was worth $686 billion until this morning.
It operates several businesses and WeChat is one of them; the service is widely used for personal and business communications within China and maintains a small user-base in US and other nations.