If you have referred to my previous post on the impact to Tencent, Bank of America has also indicated in its assessment today that the impact would be minimal as I have indicated and BofA highlighted that there were about 5.9 million WeChat users in the US who were mostly Chinese immigrants and students, being less than 1% of total WeChat users with low monetization rate. As rationale as we can be, the stock market isn't that rationale and we are likely to see more volatility in the price action for Tencent.
Source: AAStocks
Volume: Looking at its daily chart, it looks pretty bearish for the past 2 days with selling volume of 62 million and 48 million, 2-3x more of its average volume of 15 million per trading day. The last time we saw such volume is during March where the markets dropped severely and volume on a daily basis back then was 40-60 million on average over 9 trading days.
Trend: It has breached its 20MA easily on 7 August and continued to close before its 20MA today. However if you noticed, when it nearly touched its 50MA for the 2 trading days, it did show support to not break its 50MA. We will need to monitor if the 50MA can hold and if it does, we would likely see 538 as its first resistance point at the 20MA. If it doesn't, the next level is likely at the 61.8% Fibonacci at 474.26.
We will need to monitor the geo-political situation between US and China as US is targeting one of the biggest China company and we may expect China to target likely in this case, Apple for whatever reason it can think of to make life difficult.
My view on this is that as this tit for tat prolongs, it does not really help the current US president in his quest for re-election as the US Business leaders will likely find it extremely difficult to work with their Chinese counterparts and potentially lose out on the Chinese market. The Chinese normally works on relationships and to repair relationships will take years.
