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Shares of the Chinese technology heavyweight Tencent Holdings fell nearly 8% in Hong Kong after the company was added to a list of “Chinese military companies” by the US Department of Defense.
The move reflects an 8% drop in Tencent’s American depositary receipts on Wall Street.
Other Chinese companies added to the list include the battery maker. CATLwhich is part of the supply chain of automobile manufacturers such as Ford And Tesla.
CATL shares, which fell as much as 5.6%, were last down 2.8% in Shenzhen.
THE National Defense Authorization Act of 2024 states that DoD will be prohibited from purchasing goods or services directly from entities on the list in June 2026, and indirectly starting in June 2027.
In response to the decision, Tencent said in a statement that its inclusion on the list was “clearly an error.”
“We are neither a company nor a military supplier. Unlike sanctions or export controls, this listing has no impact on our business,” the company added. CATL also called the designation an “error” in its response, saying it “is not engaged in any military activity.”
Tencent has a good chance of winning its delisting in U.S. courts because of the company’s business model, which primarily revolves around social media and online gaming, said Ivan Su, senior equity analyst at Morningstar.
The United States is targeting Chinese technology companies by seeking to restrict the transfer of high-end technology to China. Last year, it revoked some chip sales licenses to China’s Huawei in May and unveiled drastic new export controls on critical technologies in September, including quantum computing and semiconductors.
