Shares of Tencent Holdings, a major Chinese tech company, fell by 5.3% in Hong Kong following its addition to a U.S. Department of Defense list of “Chinese military companies.” This decline was mirrored by an approximately 8% drop in Tencent’s U.S. depository receipts. Alongside Tencent, battery manufacturer CATL, which supplies companies like Ford and Tesla, was also included in the list, resulting in a 5% decline of CATL shares in Shenzhen. In response, Tencent issued a statement declaring the designation a “clear mistake,” asserting that the company is neither a military firm nor a supplier, and noted that the listing would not impact its business operations. Similarly, CATL expressed dissatisfaction with its classification, emphasizing that it does not engage in military-related activities. Both companies have sought to distance themselves from the military association implied by the U.S. government’s decision, illustrating the tension surrounding U.S.-China relations and its implications for international business. This situation highlights ongoing scrutiny of Chinese firms within global markets, as geopolitical factors increasingly influence corporate valuations and operations.
