Shopee’s parent company Donghai Group (SE-US) In the biggest one-day stock price drop, the market value has evaporated by more than 16 billionDollarThe reason is that the Indian government has blocked Donghai’s large-scale games. Investors worry that the ban may only be the beginning, and Donghai may face more troubles in the future.
Donghai’s stock price closed down 18.39% on the 14th, and its market value evaporated by more than 16 billion overnightDollarthe downside is that the Indian government has blocked the company’s large game “Free Fire” (Free Fire).
India has banned hundreds of mainland Chinese apps (Apps) in the past two years, but India’s inclusion of Donghai in the policy surprised management and investors. The startup’s founder, Li Xiaodong, who was born in Tianjin, mainland China, is now a citizen of Singapore. Donghai’s largest shareholder is Chinese social media giant Tencent Holdings (00700-HK) 。
Investors are concerned that India may ban Shopee, the second pillar of Donghai Group. As of December last year, Shopee had regarding 300 employees and 20,000 local sellers.
Analysts at Morgan Stanley estimate that India’s Free Fire sales accounted for only one-tenth of Donghai’s video game sales last year, or regarding $475 million.Dollar, which means that the impact of India’s ban on Donghai’s revenue may only be 5%. However, investors sold Donghai shares sharply, indicating that investors are more worried regarding the growth prospects of Free Fire and Donghai.
Donghai may have grounds for appeal: shareholders approved the proposal on the 14th to increase the voting rights of founder Li Xiaodong to 60%, and convert the super-voting shares in Tencent’s hands into ordinary shares, thereby reducing Tencent’s voting rights to no to 10%, down from 23% in March last year. Donghai’s weakening of Tencent’s control may appease the Indian government.
Indian media reported on the 14th that the Ministry of Electronics and Information Technology of India said that it had received a request from the Ministry of the Interior to ban 54 Chinese apps because these apps involve privacy and security threats.
