Tencent Plunges in HK Market as the US Accused Chinese Companies Led by It of Working with the Military
Go Wire
January 7, 2025
GoGPT Summarizes Articles
On Monday (Jan. 6). The U.S. Defense Department said to blacklist Chinese tech giants led by social media leader Tencent Holdings and battery maker CATL by adding them to a list of companies suspected of collaborating with the Chinese military.
The updated list of Chinese military companies, formally known as the “Section 1260H List”, included 134 companies.
On Tuesday (Jan. 7), Tencent (HK: 0700), which trades on the Hong Kong stock market, once slumped nearly 7%. Tencent (OTC: TCEHY), which is listed in the US market, once plunged nearly 8% in over-the-counter trading.
Tencent stated that it was a mistake to add it to the list because Tencent is not a military-industrial enterprise or supplier. It claimed that this inclusion has no impact on its business.
CATL (SHE: 300750), the EV battery maker and the US Ford Motor's partner, also claimed the list was a mistake because it has never participated in military-related activities.
The expanding blacklist is one of many methods Washington has used to underline and constrain Chinese companies that it regards as a security risk, increasing tensions between the two countries.
Jefferies noted that the list reflects an opinion the Defense Department makes. The worst result for those listed companies would be a US investment ban, but the outcome depends on Trump's administration.
Craig Singleton, a China expert at the Foundation for Defense of Democracies, said the additions show that the US is wary of doing business with Chinese technology firms because the US wants to protect its own sensitive, advanced technology.
U.S. lawmakers have urged the Pentagon to add many companies, including CATL, to the list. While the inclusion would not trigger an immediate ban, it would strike the reputation of the companies on the list and warn US companies to weigh the risks of doing business with them. The list would also force the Treasury Department to sanction the companies.
Two companies that sued the Pentagon as a result for including them on the list- drone maker DJI and lidar maker Hesai Technologies $HSAI - remain on the updated list. However, the Pentagon removed six companies, including China Railway Construction Corporation Limited (SHA: 601186), China State Construction Group Co (SHA: 601668), and China Telecommunications Corporation (HK: 0728).
#$Hesai Group American Depositary Share each ADS represents one Class B ordinary share(HSAI)