Analysts say Tencent’s US$22 billion in US assets, mainly gaming, could be at risk after Mike Pompeo’s latest remarks
- Trump sent shock waves across the tech industry last week after signing an order to ban US entities from dealing with Tencent’s WeChat app
- Tencent’s assets in the US lie primarily in video games, and uncertainty remains until the executive orders are clarified
Tencent’s US assets worth some US$22 billion could be at risk after comments from US Secretary of State Mike Pompeo that the scope of President Donald Trump’s executive orders could extend beyond the Chinese internet giant’s WeChat app and ByteDance’s TikTok in the US, analysts say.
During a speech in Prague, Czech Republic, on Thursday, Pompeo said the target of Trump’s executive orders could be interpreted as being “broader” than just TikTok and WeChat, according to a report by CNBC.
“So when President Trump made his announcement about not only TikTok, but about WeChat – and if you read it, it’s broader even still than that – is that we’re going to make sure that American data does not end up in the hands of an adversary like the Chinese Communist Party, for whom we have seen data uses in western China that rival the greatest human rights violations in the history of mankind,” said Pompeo.
Trump sent shock waves across the tech industry last week after signing an order to ban US entities from dealing with Tencent Holdings’ super app WeChat and ByteDance’s video-sharing app TikTok from September. The orders call on the US commerce secretary to define the banned transactions. As such, the scope of the ban, including which specific transactions would be cut, remains unclear and analysts have said the orders could be subject to legal challenges.
“Although both the US government and Tencent have moved to allay fears over the gaming business, until the rules are published by the Commerce Department as to exactly what transactions are banned and which are allowed, there’s risk in the uncertainty of how things will shake out,” Bloomberg Intelligence analyst Matthew Kanterman said on Friday.
In response to the executive order issued last week, Bloomberg Intelligence analysts Vey-Sern Ling and Kanterman said that Tencent has at least US$22 billion worth of gaming investments in the US that could be at risk of forced divestment if the presidential executive order banning WeChat is broadened to other assets.