Amid global market disruptions caused by US tariff policies, shares of Chinese internet companies listed in the US and Hong Kong have experienced significant volatility. However, analysts from JPMorgan suggest that the direct impact of US tariffs on these companies is minimal, particularly for online consumption.
JPMorgan analysts highlight that the primary effect of US tariffs on Chinese internet companies, excluding cross-border e-commerce, is indirect. For instance, high tariffs could weaken Chinese exports to the US, potentially affecting consumer spending and advertising demand. They estimate that the impact on online consumption is less than 0.5%.
JPMorgan identifies Pinduoduo as the most affected stock due to its US business accounting for over 10% of its revenue. In contrast, Tencent and NetEase are considered more defensive against tariff impacts, as their digital entertainment segments, especially online gaming, are counter-cyclical and have minimal US revenue exposure.
KraneShares notes that the US revenue exposure for Chinese internet companies is below 2%, reflecting their focus on the domestic market. Major players like Tencent, Alibaba, JD.com, and Meituan primarily cater to China's vast consumer market. Additionally, these companies have developed self-sufficient technology stacks, reducing reliance on US components and insulating them from supply chain disruptions.
