Alibaba, Tencent Shares Fall After Reports of US Investment Ban

On Tuesday, we reported on outgoing US President Donald Trump issuing an executive order likely to take effect in 45 days that will ban eight Chinese related apps including Alipay owned by Chinese billionaire Jack Ma’s Ant Group and WeChat Pay, QQ Wallet owned by Chinese tech giant Tencent Holdings Ltd and Alibaba Group Holding Ltd.

The affected apps are Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office.

RELATED READING: TRUMP ISSUES EXECUTIVE ORDER BANNING JACK MA’S ALIPAY AND SEVEN OTHER CHINESE APPS

Thursday shares of Alibaba Group Holding Ltd. and Tencent Holdings Ltd. led a technology stocks selloff as the Trump administration considers barring investments in China’s two most valuable companies. The conglomerates’ shares slid around 4% on the Hong Kong stock exchange after the Journals said officials were considering prohibiting Americans from investing in the firms. The report cited several people familiar with the matter.

The U.S. government blacklisted 31 Chinese companies in November over concerns that they support Beijing’s military through an executive order. U.S. officials have been discussing expanding the executive order to expand the blacklist, the Journal’s sources said. 

When the Hong Kong stock exchange closed, Tencent’s share price was down 4.69% to 568.5 Hong Kong dollars, while Alibaba’s share price was down 3.91% to 221 Hong Kong dollars. In premarket trading, U.S.-listed shares of Tencent were down 2.8% and Alibaba’s were slightly in the red. 

If they do get added to the U.S. blacklist, then American investors won’t be able to trade their stocks as on Monday. Those who already own shares in the companies would have until November to unload them.

Trump signed an executive order shortly after losing the 2020 presidential election to Joe Biden in November and it is already having consequences. The New York Stock Exchange confirmed on Wednesday that it plans to delist China Mobile, China Telecom and China Unicom.

In December, the U.S. added Chinese drone company DJI and Semiconductor Manufacturing International to a trade blacklist. The Commerce Department said the action against SMIC “stems from China’s military-civil fusion doctrine and evidence of activities between SMIC and entities of concern in the Chinese military industrial complex.”

Alibaba’s battles extend beyond the U.S. and to its home turf, where Chinese regulators have recently launched an antitrust investigation against the company.

Jack Ma, Alibaba’s founder and CEO, is keeping a low profile and hasn’t been seen in public since October after he appeared to criticize Chinese regulators. Unfortunately, Alibaba and Tencent haven’t yet responded to requests for comment.