Jack Ma, CEO of Chinese e-commerce giant Alibaba, speaks during his visit to the Vivatech Innovation and Innovation Fair in Paris on May 16, 2019.
Philippe Lopez | AFP | Getty Images
Shares of Alibaba and Tencent fell sharply on Thursday, after a report, citing several people familiar with the issue, suggested that the Trump administration might be on the verge of adding Chinese technology giants to a US blacklist.
Conglomerates saw their shares on the Hong Kong stock exchange fall by about 4% after a report in The Wall Street Journal said officials were thinking of banning Americans from investing in companies.
The US government blacklisted 31 Chinese companies in November over concerns that they were supporting the Beijing military with an executive order. U.S. government and defense officials have discussed expanding the executive order, so the blacklist includes several companies, according to anonymous sources quoted by the WSJ.
At the close of the Hong Kong Stock Exchange, Tencent’s share price fell 4.69% to Hong Kong’s $ 568.5, while Alibaba’s share price fell 3.91% to Hong Kong’s $ 221.
If they are added to the US blacklist, then US investors will not be able to trade their shares as of January 11th. Those who already own shares in companies will have until November to download them.
Trump signed the initial executive order shortly after losing the 2020 presidential election to Joe Biden and it already has consequences. The New York Stock Exchange confirmed on Wednesday that it intends to write off China Mobile, China Telecom and China Unicom.
On Tuesday, the Trump administration decided to ban Chinese payment applications, including Alipay and WeChat Pay, which are linked to Alibaba and Tencent, respectively.
In December, the US added Chinese drone company DJI and Semiconductor Manufacturing International to a commercial blacklist. The US Department of Commerce said the action against SMIC “comes from China’s military-civilian fusion (MCF) doctrine and evidence of activities between SMIC and entities of interest in the Chinese military industrial complex.”
Alibaba’s struggles extend beyond the United States to its home turf, where Chinese regulators recently launched an antitrust investigation against the company.
Jack Ma, the founder and CEO of Alibaba, keeps his profile low and has not been seen in public since October last year, after appearing to criticize the country’s regulators.
Alibaba and Tencent did not immediately respond to CNBC’s request for comment.