US President Donald Trump issued an executive order to have WeChat and TikTok banned, in th next 45 days.
- Naspers lost nearly 5% of its share price, on the back of an announcement of US President Donald Trump to ban Chinese apps TikTok and WeChat.
- The internet company has essentially been caught in trade tensions between the US and China, say analysts.
- It’s possible that the losses might just be attributable to market noise.
The Naspers [JSE:NPN] share price was trading nearly 5% weaker on Friday, this following US President Donald Trump issuing an executive order overnight to have Chinese apps TikTok and WeChat banned in 45 days.
Naspers, through Prosus, owns a 31% stake in Chinese internet giant Tencent, which owns WeChat. WeChat has over a billion users in China and is one of the key ways people communicate.
Naspers share price closed at R 3219.50 on Thursday and dropped 4.2% overnight to open at R3082.20 on Friday morning. Before close on Friday it had lost more ground, trading nearly 4.92% weaker at R3064.40 at 15:43. It’s lost 9% of its value over the past year.
Nilan Morar, VP of trading at GT247 said the announcement by Trump relates to the US trade tensions with China. Trump’s announcement comes when the US election is less than three months away, and he has said the ban is in the interests of US security, and with the US election being less than three months away.
“It’s certainly election-related, he is trying to make his mark,” said Morar.
‘Noise’ or cause for concern?
“Tencent was down 10% at open, and had recovered by close – but on the open the perception as that this was going to hurt them,” Morar added.
There are views that Trump is trying to get TikTok bought by US company, which according to some reports is Microsoft. The app is estimated to have about 800 million monthly users.
Investment analyst Simon Brown, said that the market moves might just be “noise”, ahead of the US election and amid the US-China trade war.
“If it’s just a ban of WeChat in the US, it’s not going to do anything to Tencent’s earnings,” he said.
“Within a week or two or maybe even sooner we will have all forgotten about this and moved on.”
*Fin24 is part of Media24, owned by the Naspers group.