US considers blacklisting China’s Alibaba, Tencent: Sources

By Rahul Vaimal, Associate Editor
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The Trump administration is considering adding China’s Alibaba Group Holding and Tencent Holdings to a blacklist of Chinese companies that are allegedly owned or controlled by the Chinese military, according to sources.

Even though the plan is still under deliberation and may not go through as agencies debate its impact on markets, the shares of the two most valuable companies of China dropped.

Alibaba fell more than 5 percent and Tencent dropped as much as 4.4 percent in Hong Kong trading, tracking losses in their New York-listed securities. The US State Department, Department of Defense and Treasury Department are among authorities involved in the deliberations, according to sources. The discussions focus in part on how such a move might affect capital markets.

Imposing a ban on the two companies would mark the most dramatic escalation yet by President Donald Trump’s administration, given the sheer size of the two firms and the difficulty unwinding positions. At $1.3 trillion, the combined market value of their primary listings is nearly twice the size of Spain’s stock market.

“If the bans are implemented then it’d be a huge thing for the market,” said Steven Leung, executive director at Uob Kay Hian (Hong Kong) Ltd. “It’s still too early to say. After the Biden administration starts, the policy could change again.”

If implemented, the ban would further fray the relationship between the world’s two largest economies, which have clashed over everything from COVID-19 to Hong Kong. Authorities in Washington have been ramping up efforts to deprive Chinese companies of US capital in the final months of the Trump administration, adding to economic tensions as President-elect Joe Biden prepares to take over this month.

Recently, US President Donald Trump signed an executive order banning transactions with eight Chinese software applications, including Ant Group’s Alipay mobile payment app, escalating tensions with Beijing two weeks before President-elect Joe Biden takes office.