The new move of the USA dealt a heavy blow to China’s technology giant
A new front has opened in the ‘Cold War of the modern age’, which has been going on between China and the USA for a while, especially over technology companies. Following moves such as blocking TikTok, export restrictions on 140 Chinese companies, and retaliation from China to the US with an export ban, the US this time attacked Tencent, China’s technology giant and the owner of leading technological applications such as WeChat superapp and PubG Mobile game. added it to the list of military companies.
SHARE VALUE HAS DECREASED GREATLY
Its shares suffered a major decline after it was added to the list of Chinese military companies by the US Department of Defense. This development caused Tencent’s shares to rapidly lose value due to its possible effects on business, technology and intellectual property. The company’s shares fell 9.7 percent after the news was announced.
The US Department of Defense created this list to prevent the use of technology that supports China’s military power. Tencent stated that its inclusion on this list was a “mistake” and responded with the statement “we are not a military company.” The company stated that it plans to take steps to be removed from this list by consulting with the US Department of Defense.
A NEW RISK FOR CHINESE TECH GIANTS
This development stands out as a new risk factor for Chinese technology giants. While China’s difficult economic conditions affect companies’ share values, the US government is trying to hinder innovation in China by limiting high-tech exports and other measures. Citigroup viewed the decline in Tencent’s shares as an attractive buying opportunity as the company maintains its leading position in China.
Tencent, along with WeChat and other cost contributors, holds a dominant position as the largest gaming company in China. However, the growth rate has slowed compared to pre-pandemic periods. The company maintains its growth potential through the WeChat ecosystem and various other revenue sources.