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<Research>CLSA Expects Limited Impact of US-CN Tariff Dispute on TENCENT/ BABA-W Operations
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Although the escalating tensions between the US and China are tapering market sentiment, CLSA believed the impact on the business operations of TENCENT (00700.HK) and BABA-W (09988.HK) should be limited, the broker said in a report. It believed that US regulatory measures are unlikely to hamper the development of China's AI in the short term. After the announcement of a series of export control measures by both the US and China last week, Alibaba and Tencent's stock prices plummeted by 8.5% and 6.3% respectively last Friday (10th), attributable to the increased trade tensions exerting pressure on Chinese internet stocks. However, CLSA pointed out that apart from the gaming business, Tencent's operations are mainly focused on the domestic market. The company has already reserved enough high-performance chips for future development and can manage chip demand by procuring domestic alternatives, adopting various models, and upgrading software. Meanwhile, Alibaba.com has expanded to different regions, with a minimal presence in the US market. Also, its cloud business is expected to maintain high growth propelled by strong AI demand and the development of new chips in-house. AASTOCKS Financial News Website: www.aastocks.com |
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