Pentagon List Includes Tencent, Causing Stock Dip; Company Disputes Designation
Tencent, a prominent Chinese technology conglomerate, has been added to the U.S. Department of Defense's (DOD) list of companies with ties to the Chinese military, specifically the People's Liberation Army (PLA). This inclusion stems from a 2020 executive order by former President Trump restricting U.S. investment in Chinese military entities. The order mandates divestment from these companies, believed to contribute to PLA modernization through technology, expertise, and research.
The DOD's updated list, released January 7th, immediately impacted Tencent's stock price, causing a 6% drop on January 6th and continued downward pressure. Experts attribute this decline to the listing and its potential ramifications for U.S. investment.
Tencent, in a statement to Bloomberg, refuted the designation. A spokesperson asserted, "We are not a military company or supplier. Unlike sanctions or controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding."
This isn't the first time companies have been added or removed from this list. Several companies previously designated have since been removed after demonstrating they no longer met the criteria. At least two companies successfully collaborated with the DOD to achieve removal, suggesting a similar strategy for Tencent.
Tencent's global influence is significant. It's the world's largest video game company by investment and a major player in the broader tech sector. Its gaming arm, Tencent Games, operates through a publishing division and holds stakes in numerous renowned studios, including Epic Games, Riot Games, Techland, Don't Nod, Remedy Entertainment, and FromSoftware. Tencent Games has also invested in numerous other developers and related companies like Discord. The potential loss of U.S. investment due to this listing carries substantial financial implications.
