Tencent shares fall as US designates publisher a Chinese military company

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Chinese megacorp Tencent has seen its shares fall by 8% in Hong Kong following the US Department of Defense’s decision to designate the corporation as one of 134 “Chinese military companies”.

The William M. (Mac) Thornberry National Defense Authorisation Act for Fiscal Year 2021 act requires the US Department of Defense to identify and publish an annual list of “Chinese military companies” until 2030.

“Clearly a mistake”

Though Tencent is now among them, its position is not necessarily permanent. While 134 companies are now present on the list, the Department of Defense has deemed six previously named entities as eligible for removal from the list this year. They include China Telecommunications Corporation and ShenZhen Consys Science & Technology Co.

A reconsideration process is available to companies with an authorised representative and evidence of why they should be removed.

According to CNBC, Tencent has already deemed the decision “clearly a mistake”, having noted in a statement: “We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business.”

Tencent’s current presence on the list hasn’t triggered any ban from activity in the US but has had an immediate impact on shares, down by 5% overnight and 8% as of the time of writing.

While many of the 134 companies listed include parent companies and their subsidiaries (there are 56 entities listed overall), Tencent subsidiaries such as TiMi Studio Group and LightSpeed Studios were not directly named in the latest document.

Tencent has investments in numerous games companies across the world, including a minority stake in Fortnite developer Epic Games and full ownership of League of Legends maker Riot Games.