Tencent Branded a Chinese Military Company by US Government

Pentagon List Includes Tencent, Causing Stock Dip; Company Disputes Designation

Tencent Holdings Limited, a Chinese tech giant, has been added to the U.S. Department of Defense's (DOD) list of companies with ties to the Chinese military. This inclusion, stemming from a 2020 executive order by former President Trump restricting U.S. investment in Chinese military entities, immediately impacted Tencent's stock price.

The DOD's list identifies companies believed to contribute to the People's Liberation Army's (PLA) modernization through technology, expertise, or research. While initially comprising 31 companies, the list has expanded since its inception, leading to previous delistings from the New York Stock Exchange.

Tencent swiftly responded to its inclusion, issuing a statement to Bloomberg asserting that it is "not a military company or supplier" and that the listing doesn't directly affect its operations. However, the company intends to collaborate with the DOD to clarify any misunderstandings and potentially seek removal from the list, mirroring the successful efforts of other companies in the past.

The announcement caused a significant 6% drop in Tencent's share price on January 6th, with subsequent downward trends attributed to the listing. Given Tencent's global prominence—as the world's largest video game company by investment and a major player in the broader tech sector—its presence on this list carries substantial financial implications.

Tencent's gaming division, Tencent Games, operates as a major publisher and investor. Its portfolio includes significant stakes in prominent studios such as Epic Games, Riot Games, Techland (Dying Light), Dontnod Entertainment (Life is Strange), Remedy Entertainment, and FromSoftware, alongside investments in numerous other developers and companies like Discord. The potential for restricted U.S. investment could significantly impact this vast and influential gaming empire.