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Jack Ma, CEO of Chinese e-commerce giant Alibaba, speaks during his visit to the Vivatech startup 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 matter, suggested that the Trump administration may be on the verge of adding Chinese tech giants to a American blacklist.
The conglomerates saw their shares on the Hong Kong Stock Exchange drop about 4% after the Wall Street Journal report said officials were considering banning Americans from investing in companies.
The US government blacklisted 31 Chinese companies in November, fearing it would back Beijing’s military through an executive order. According to anonymous sources cited by the WSJ, U.S. state and defense officials have discussed expanding the executive order so that the blacklist includes more companies.
At the close of the Hong Kong Stock Exchange, Tencent’s share price was down 4.69% to HK $ 568.5, while Alibaba’s share price was down 3.91% to 221 Hong Kong dollars.
If added to the US blacklist, US investors will not be able to trade their shares from January 11. Those who already own shares in the companies would have until November to unload them.
Trump signed the initial executive order shortly after losing the 2020 presidential election to Joe Biden and it’s already having consequences. The New York Stock Exchange confirmed on Wednesday that it plans to withdraw China Mobile, China Telecom and China Unicom.
On Tuesday, the Trump administration decided to ban Chinese payment apps, including Alipay and WeChat Pay, which are linked to Alibaba and Tencent, respectively.
In December, the United States added Chinese drone company DJI and Semiconductor Manufacturing International to a commercial blacklist. The US Department of Commerce said the action against the SMIC “stems from the Chinese doctrine of military-civilian fusion (MCF) and evidence of activity between the SMIC and entities of concern in the Chinese military-industrial complex.”
Alibaba’s battles extend beyond the United States and its territory, where Chinese regulators recently launched an antitrust investigation against the company.
Jack Ma, founder and CEO of Alibaba, is keeping a low profile and has not been seen in public since last October after appearing to criticize the country’s regulators.
Alibaba and Tencent did not immediately respond to CNBC’s request for comment.
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