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WeChat ban sends shockwaves through global tech stocks – CNN

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The reckoning was immediate for WeChat parent, Tencent (TCEHY). The company’s stock plunged as much as 10% in Hong Kong on Friday, closing 5% lower. A Tencent spokesperson told CNN Business that the firm is “reviewing the executive order to get a full understanding.”
Tencent’s tumble wiped 6% off shares in Prosus (PROSY), the technology arm of South African media group Naspers (NPSNY). Prosus, which is listed in Amsterdam, owns a 31% stake in the Chinese internet giant. The stock later recovered some of its earlier losses, but the drop wiped more than 4% off Naspers in Johannesburg.
Trump’s decision to extend a threatened ban on TikTok to WeChat raises questions as to whether other Chinese tech companies, such as e-commerce giant Alibaba (BABA), could be in the firing line.

The orders would ban WeChat and TikTok from operating in the United States in 45 days if they are not sold by their Chinese parent companies —Tencent and Beijing-based ByteDance respectively. Paul Triolo, head of geotechnology at Eurasia Group, described the move as an “unprecedented intervention by the US government in the consumer technology sector.”

Trump claims the apps pose a national security threat and his order outlines fears that the Chinese government could use them to collect personal information on US citizens, such as location data and browsing histories, which could be used for “blackmail and corporate espionage.”

If the US government is worried about data privacy, its next target could be Alibaba. The e-commerce platform opened to US sellers last July and the country is its fastest growing market. It has 10 million customers buying merchandise from its platform worldwide, including in the United States, and sold $1 trillion worth of goods over the 12 months through March, mostly in China.
Alibaba’s biggest shareholder is SoftBank (SFTBF), which holds more than 25% of the company. SoftBank’s Vision Fund also owns a minority stake in ByteDance. SoftBank’s shares slipped in Tokyo and have lost more than 3% this week.

Other major investors in Alibaba and Tencent include big US funds such as Vanguard, BlackRock and T.Rowe Price, according to Refinitiv.

What is WeChat and why does Trump want to ban it?

Alibaba’s stock lost 3% in Hong Kong on Friday, signaling that investors were weighing the risks of Trump’s sweeping clampdown on Chinese internet companies. Alibaba’s cloud services, which US businesses use to host their online operations, are most immediately at risk after the Trump administration unveiled its “Clean Network” program earlier this week.

The program is an effort to protect America’s telecom and technology infrastructure from “aggressive intrusions by malign actors, such as the Chinese Communist Party,” Secretary of State Mike Pompeo said in a statement.

The measures apply to telecommunications networks, app developers, cable makers, and cloud services providers, and specifically target Alibaba, Tencent and Huawei.

The program will seek to “prevent US citizens’ most sensitive personal information and our businesses’ most valuable intellectual property, including Covid-19 vaccine research, from being stored and processed on cloud-based systems accessible to our foreign adversaries through companies such as Alibaba, Baidu, and Tencent,” Pompeo said.

China’s Ministry of Foreign Affairs on Friday said it “firmly opposes” the bans on WeChat and TikTok. Ministry spokesperson, Wang Wenbin, said during a daily press briefing that the United States is using state power “to oppress non-American businesses.”

— Sherisse Pham and Julia Horowitz contributed reporting.

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