Tencent’s Stock dropped 7%, as the US Labeled it a Chinese Military Firm

Following its inclusion on the U.S. Department of Defense’s list of “Chinese military companies,” shares of Chinese tech giant Tencent Holdings fell 7% in Hong Kong.
The action comes after Tencent’s U.S. depository receipts on Wall Street fell by almost 8%.
The battery manufacturer CATL, which supplies automakers including Ford and Tesla, was one of the other Chinese businesses placed to the list.
Shenzhen saw a 2.8% decline in CATL shares, which had previously dropped as much as 5.6%.
According to the National Defense Authorization Act of 2024, the DoD will not be allowed to purchase products or services directly from companies on the list starting in June 2026 and indirectly starting in June 2027.
Ivan Su, a senior equities analyst at Morningstar, stated that Tencent’s business strategy, which mostly focuses on social networking and online gaming, gives it a good chance of successfully securing its removal from the list through U.S. courts.
In an effort to limit the flow of advanced technologies to China, the United States has targeted Chinese tech businesses. In May of last year, it cancelled several permits to sell chips to China’s Huawei, and in September, it announced new, comprehensive export restrictions on vital technologies, including as semiconductors and quantum computing.
Companies who wish to sell specific sophisticated computer semiconductors or associated manufacturing equipment to China must apply for a license, according to a 2022 ruling by the Bureau of Industry and Security of the U.S. Department of Commerce.