Tencent Branded a Chinese Military Company by US Government

Pentagon List Includes Tencent, Impacting Stock Value

Tencent, a major Chinese technology firm, 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, prohibits U.S. investment in designated Chinese military companies. The order's impact is already evident in a decline in Tencent's stock price following the announcement.

Tencent's inclusion on the list, which identifies companies believed to contribute to the People's Liberation Army's modernization, triggered a 6% drop in its share value on January 6th. While the company maintains it is not a military entity or supplier, it has pledged to cooperate with the DOD to clarify any misunderstandings. This proactive approach mirrors successful efforts by other companies in the past to have their names removed from the list after demonstrating they no longer meet the criteria.

The DOD's list, initially comprising 31 companies, has expanded since its inception. The consequences of appearing on this list are significant, as evidenced by previous delistings from the New York Stock Exchange. Given Tencent's global prominence as the world's largest video game company by investment, its presence on the list carries substantial financial implications for the company and the U.S. investment landscape.

Tencent's extensive gaming portfolio, managed through Tencent Games, includes significant stakes in renowned studios such as Epic Games, Riot Games, Techland, Don't Nod, Remedy Entertainment, and FromSoftware. The company's investment reach also extends to other prominent gaming-related entities like Discord. The potential for removal as a U.S. investment option adds another layer of complexity to Tencent's already considerable global influence.