Shares of Hong Kong-listed Tencent Holdings Limited (HK:0700) plummeted today after the U.S. flagged the company’s ties with the Chinese military. The company was added to a list of companies identified by the U.S. Department of Defense as having direct or indirect ties to the Chinese military. Following the news, Tencent shares fell by almost 7% as of writing.
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Tencent Holdings is a technology company that provides digital entertainment and internet value-added services to more than 1 billion customers.
US Tags Tencent as Part of Military Ties List
The U.S. Department of Defense has characterized the list as a measure to curb China’s emergence as a military powerhouse. The Pentagon also highlighted China’s “military-civil fusion strategy,” which allows the Chinese military to gain access to cutting-edge technology through companies, universities, etc. that operate under the guise of civilian organizations.
The list also includes battery company Contemporary Amperex Technology Co. (CATL) and chip maker Changxin Memory Technologies, among others. Notably, CATL dropped nearly 3% as of writing on the Shenzhen exchange.
In response, Tencent stated that its inclusion on the list was an error, adding, “We are not a military company or supplier.” It further clarified that, unlike sanctions or export controls, this listing does not impact its business. Interestingly, being included on the Pentagon’s blacklist of Chinese military companies does not trigger legal consequences or sanctions, but it does harm the reputation. However, companies included on the Pentagon’s blacklist will be prohibited from doing business with the Department of Defense from 2026.
Are Tencent Shares a Good Buy?
According to TipRanks’ rating consensus, 0700 stock has received a Strong Buy rating, backed by 12 Buy recommendations. The Tencent share price forecast is HK$537.61, which implies an upside of 40.4% on the current trading level.
