Investors eyeing Tencent after NBA debacle
Chinese tech giant caught in political row between US and China over Hong Kong
Tencent, the Chinese technology and entertainment giant, has become embroiled in a political dispute with American corporations. The effect on its share price is uncertain.
A tweet from a National Basketball Association (NBA) executive in support of the Hong Kong protests angered Chinese business figures and politicians. In reaction Tencent stopped broadcasting NBA games, cutting the league off from an audience of half a billion people.
Tencent has invested billions in the league over the past decade, becoming the main broadcaster of American basketball in China.
The company sells advertisements on its highly popular streams and only recently signed a $1.5 billion (£1.18 billion), five-year deal with the NBA. With uncertainty as to how long this blackout will last, it is not clear how Tencent will make up for this shortfall in revenue.
Tencent’s share price was up in pre-market trading and recently has hovered between $40.5 and $41.5.
The NBA’s attempts to mollify the reaction in China backfired. President Donald Trump yesterday accused the CEO of the NBA of “pandering to China” and acting “like a little boy”. Trump added: “They talk badly about the United States but when it [comes to] China they don’t want to say anything bad.”
The controversy has spread to Tencent’s gaming interests. It owns a 40% stake in Epic, maker of the video game Fortnite, whose American CEO declared that players were welcome to discuss politics. This provoked anger in China, with Chinese gamers calling for a boycott.
The debacle looks set to continue alongside US-China trade talks. With the White House reportedly considering restrictions on US pension fund investments into China and this week placing eight Chinese companies on a blacklist for alleged involvement in human rights abuses, the recent stability in Tencent’s share price could come to an end.