HONG KONG: China's Tencent Holdings will be under pressure to address concerns on the impact of a US ban on WeChat-related transactions and outline its plans to mitigate any fallout as it reports second-quarter results on Wednesday (Aug 12).
The ban, to take effect in September and the latest salvo in a worsening US-China standoff, has cast a shadow over Tencent that aims to eventually get about half its gaming revenue from overseas, versus 23 per cent as of last year. The United States would be key to such a plan as it is the No 2 gaming market after China.
Tencent shares plunged more than 10 per cent within hours on Friday after news of the ban, knocking as much as US$74 billion off the tech giant's market value.
"The order as written is so broad that it could end up blocking the ability of any US person or company from working with Tencent," said Dan Wang, analyst with Gavekal Dragonomics.
So far, Asia's largest gaming and social media firm has said it is reviewing the potential consequences. Financial markets and millions of consumers will be seeking more clarity when Tencent unveils its April-June results.
Tencent is expected to post a 27 per cent jump in revenue to 112.76 billion yuan (US$16.22 billion) and a 14 per cent higher profit, Refinitiv data shows, on strong demand from users stuck at home due to coronavirus-related curbs.
Its subsidiary US-listed
has reported better-than-expected quarterly results.
The unit said it was "premature" to speculate over a potential delisting, in response to a question on if it had a plan to react to a recommendation from the Trump administration on auditing US-listed Chinese firms.
It did not comment on the WeChat ban.
Downloads of apps seen as alternatives to WeChat surged in the United States last week.
First-time installs of QQ, an older Tencent messaging app, jumped 220 per cent for the week of Aug 3 versus the prior week, while downloads of Japan's Line rose 340 per cent, according to analytics firm SensorTower.
It was not clear whether the sanctioRead More – Source