Shares in Hong Kong fell after Tencent and CATL were added to a U.S. list of companies deemed to have military ties. Both companies deny the designation, stating they are not involved in military activities.
Shares in Hong Kong declined after the company's U.S. depository receipts dropped roughly 8% overnight. Tencent and CATL labeled the inclusion a 'mistake', asserting they are not a military company or involved in any military-related activities. The National Defence Authorization Act of 2024 states that the Department of Defence (DoD) will be prohibited from procuring goods or services directly from entities on the list by June 2026, and indirectly by June 2027.
'We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business,' the company stated. CATL also characterized the designation as 'a mistake' in a response, saying it 'is not engaged in any military-related activities.' Tencent has a good chance of securing its exclusion from the list through U.S. courts due to the company's business model, which primarily revolves around social networking and online gaming, according to Ivan Su, senior equity analyst at Morningstar. The U.S. has targeted Chinese tech companies as it seeks to curb the transfer of high-end technologies to China. Last year, it enacted restrictions requiring companies to apply for a license if they want to sell certain advanced computing semiconductors or related manufacturing equipment to China
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