Pentagon List Includes Tencent, Causing Stock Dip
Tencent, a major Chinese technology firm, has been added to the U.S. Department of Defense's list of companies with ties to the Chinese military (PLA). This designation stems from a 2020 executive order by President Trump restricting U.S. investment in Chinese military entities. The order led to immediate delistings of some companies from the New York Stock Exchange. The DOD's updated list, released January 7th, now includes Tencent.
Tencent's Inclusion and Market Reaction
Tencent swiftly denied being a military company or supplier in a statement to Bloomberg, asserting the listing has no operational impact. However, the company plans to engage with the DOD to clarify any misunderstandings. This follows a trend of companies successfully removing themselves from the list after working with the DOD.
The announcement triggered a 6% drop in Tencent's stock price on January 6th, reflecting a clear market response to the designation. Given Tencent's global prominence—it's the world's largest gaming company by investment and a major player overall—this listing and potential U.S. investment restrictions have significant financial implications.
Tencent's Extensive Gaming Portfolio
Tencent's gaming division, Tencent Games, is a powerhouse, boasting a market capitalization dwarfing that of competitors like Sony. The company holds stakes in or owns numerous successful studios, including Epic Games, Riot Games, Techland (Dying Light), Dontnod Entertainment (Life is Strange), Remedy Entertainment, and FromSoftware. Tencent Games' investment portfolio also extends to companies such as Discord.
