Chinese Tech Giant Tencent Flagged as 'Military Company' by US

Pentagon List Includes Tencent, Impacting Stock Value

Tencent, a leading Chinese tech firm, has been added to the US Department of Defense's (DOD) list of companies with ties to the Chinese military. This designation, stemming from a 2020 executive order, prohibits US investors from engaging with Chinese military companies. The inclusion immediately impacted Tencent's stock price.

The DOD's list, initially comprising 31 companies, has expanded to include entities believed to contribute to the People's Liberation Army's (PLA) modernization through technology, expertise, and research. Past inclusion on this list has led to delistings from the New York Stock Exchange.

Tencent, in a statement to Bloomberg, refuted the designation, asserting it is neither a military company nor supplier. While claiming the listing doesn't directly affect its operations, Tencent indicated its willingness to cooperate with the DOD to clarify any misconceptions.

This move follows a trend of companies being removed from the list after demonstrating they no longer meet the criteria. Tencent's response suggests a similar approach to secure its removal.

The announcement triggered a significant 6% drop in Tencent's stock value on January 6th, with subsequent downward trends. Analysts link this decline directly to the DOD listing. Given Tencent's global prominence – it's the world's largest video game company by investment and a major player overall – the implications of its inclusion, and potential removal from US investment portfolios, are substantial.

Tencent's gaming empire, Tencent Games, operates as a publishing division, but the company also holds significant stakes in numerous successful studios, including Epic Games, Riot Games, Techland (Dying Light), Don't Nod (Life is Strange), Remedy Entertainment, and FromSoftware. Its investments extend to other notable developers and companies like Discord.