(Bloomberg) -- Hong Kong and mainland stocks fell after the Trump administration said it would ban U.S. residents from doing any business with China’s Tencent Holdings (OTC:TCEHY) Ltd.
Tencent, one of the most valuable stocks in the world and Asia’s biggest primary listing, tumbled as much as 10%, the most since 2011. That sent the Hang Seng Index to a loss of 2.4%. China’s tech-heavy ChiNext Index dropped 2.6% in Shenzhen to erase its gain for the week. The yuan weakened as much as 0.3%, the most in two weeks.
The U.S. has in recent days extended its efforts to curb the influence of Chinese tech to include Tencent, whose all-purpose WeChat messaging app is one of the most popular in the world with more than 1 billion users.
President Donald Trump signed a pair of executive orders prohibiting U.S. residents from doing any business with WeChat or TikTok, the popular video app owned by ByteDance Ltd., or the apps’ Chinese owners beginning 45 days from now, citing the national security risks related to personal data. Secretary of State Michael Pompeo earlier this week described TikTok and WeChat as “untrusted Chinese apps.”
“The U.S. government is expected to follow up with more measures targeting Tencent; more negative headlines will come out and could potentially further hurt sentiment toward Tencent, as well as the overall market,” Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd., said by phone. “Tencent’s overseas expansion map now looks a bit uncertain, since some M&A deals, especially if its targets are based in the U.S., will face challenges.”
Tencent is one of China’s largest tech companies, and it carries the biggest weighting on the Hang Seng Index.
Its WeChat app has become essential for daily life in Chinese cities in the past few years, used for everything from paying rent to replacing email. Banning WeChat in the U.S. could have far greater implications to cross-border business involving Chinese and American companies, impacting everything from the manufacturing of medical face masks and Apple Inc (NASDAQ:AAPL).’s iPhones to the inking contracts of lawyers and bankers.
©2020 Bloomberg L.P.