Chinese tech stocks suffer fresh hit as US drags Tencent, CATL into military sphere
Both stocks tumbled in Hong Kong and Shenzhen trading, erasing US$38 billion in market value following the US move
Some of China’s biggest private technology companies took a fresh hit on the stock market after the US added Tencent Holdings and Contemporary Amperex Technology or CATL, to a list of Chinese military entities, heightening geopolitical tensions before Donald Trump takes office later this month.
Tencent, the operator of super-app WeChat, slumped 7.3 per cent to HK$379.60 in Hong Kong, tracking a 7.8 per cent slide in its American depositary shares in New York overnight. CATL, the world’s biggest maker of electric-vehicle batteries, fell 2.8 per cent to 249.45 yuan in Shenzhen. SenseTime Group, China’s market-leading artificial intelligence company that was also blacklisted, was unchanged at HK$1.33 after tumbling by as much as 5.3 per cent in the city.
Tencent and CATL lost a combined US$38 billion of market capitalisation, while the Hang Seng Index eased 1.2 per cent to a near six-week low. The two companies called the move a mistake and misunderstanding.
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While the register does not have the effect of a trade ban or sanction and companies can ask to be removed from the blacklist, the move is likely to lead to heightened caution among investors. President-elect Donald Trump, who ordered a ban on American investments in such entities in 2020, returns to the White House on January 20.
“The move implies continued volatility particularly ahead of President Trump’s promise of added tariffs,” said Kai Wang, a strategist at US research firm Morningstar. “As a result, we would not be surprised to see investors stay sidelined on China issues until the Chinese government provides greater clarity on its own fiscal support. Also, another point of concern is that this may prevent certain funds from owning the company which will underweight that stock even more.”
