Tencent Branded a Chinese Military Company by US Government

Pentagon List Includes Tencent, Impacting Stock Value

Tencent, a leading Chinese technology firm, has been added to the US Department of Defense's list of companies with ties to the Chinese military. This designation, stemming from a 2020 executive order by President Trump, restricts US investment in Chinese military-linked entities. The inclusion has led to a decline in Tencent's stock price.

The DOD's list, initially comprising 31 companies, now includes Tencent and others identified as contributing to the People's Liberation Army's modernization through technology, expertise, or research. The 2020 order previously resulted in the delisting of three companies from the New York Stock Exchange.

Tencent's statement to Bloomberg refutes the designation, asserting that it is neither a military company nor supplier. While claiming minimal immediate business impact, Tencent expressed its intent to collaborate with the DOD to clarify any misconceptions.

This year, some companies previously listed have been removed after no longer meeting the criteria. Precedents exist where companies have successfully petitioned the DOD for removal, suggesting Tencent may pursue a similar course.

The DOD's announcement triggered a stock market reaction, with Tencent shares experiencing a 6% drop on January 6th and continued downward pressure. Experts attribute this decline to the listing and its potential implications for US investment. Given Tencent's global prominence – the world's largest video game company by investment and a major player overall – this inclusion carries significant financial weight.

Tencent's vast gaming empire, Tencent Games, operates through a publishing division and boasts substantial stakes in numerous prominent studios, including Epic Games, Riot Games, Techland, Don't Nod, Remedy Entertainment, and FromSoftware. Its investment portfolio also extends to companies like Discord.