Shares of Tencent Holdings plunged by 5.3% in Hong Kong following its classification as a “Chinese military company” by the U.S. Department of Defense. This categorization aligns with an almost 8% drop in Tencent’s American depository receipts on Wall Street, signaling the financial strain prompted by geopolitical tensions.
The Pentagon’s updated list includes battery manufacturer CATL, integral to the supply chains of major automotive players such as Ford and Tesla, resulting in a 5% share decline on the Shenzhen exchange.
The U.S. Defense Department has newly designated several Chinese tech companies as collaborators with China’s military, adding them to its annually updated “Section 1260H” list. Notable inclusions are Tencent Holdings, CATL, and chipmaker Changxin Memory Technologies, among others. Companies such as Tencent assert that their classification is erroneous, emphasizing their non-military nature, yet the listing acts as a significant reputational challenge.
Hostilities between the U.S. and China have deepened with the release of an updated roster of Chinese firms allegedly associated with military activities. Spearheaded by organizations like Tencent and CATL, the list illustrates the broadening scope of entities deemed security threats by Washington. Such moves—part of broader U.S. efforts to curb perceived risks—underscore the potential reputational and operational hurdles these companies now face.
