India, Aug. 13 -- China's two largest companies have lost a combined $140 billion in market value since the escalation of the trade war in May. As Alibaba Group Holding Ltd. and Tencent Holdings Ltd. report earnings this week back-to-back, they'll try to show the punishment is overdone.

The brutal market selloff began three months ago as Donald Trump's administration slapped restrictions on Chinese national champion Huawei Technologies Co., drawing the ire of Beijing. The Hong Kong benchmark has slid more than 10%, with the two giants dropping by similar amounts.

Yet Alibaba and Tencent's businesses are largely domestic, having little to do with the US or trade. Tencent is back on track after a horrendous 2018, with revenue growth proje...