Alibaba and Tencent could be added to a U.S. blacklist, which would keep Americans from being able to invest in their stocks at all. The move would be an expansion of an executive order that led the New York Stock Exchange to announce plans to delist China Mobile, China Unicom and China Telecom starting on Monday.
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Alibaba, Tencent could be added to blacklist
The Wall Street Journal reports that officials in the U.S. are thinking about keeping Americans from investing in Alibaba and Tencent by adding them to a blacklist. It would be an escalation of President Donald Trump's push to get Americans to stop investing in major Chinese firms.
Sources told the Journal that officials with the State and Defense Departments have been talking about expanding the blacklist of firms that Americans can't invest in because of alleged ties to the Chinese military. The blacklist was first announced in November when 31 companies were placed on it.
Alibaba and Tencent are the two most valuable public companies in China. Together, their market capitalization exceeds $1.3 trillion. Due to their massive size and success, many mutual funds and other investors in the U.S. own their shares. After the report that Alibaba and Tencent could be added to the blacklist, shares of both companies fell in the U.S. and Hong Kong.
Cracking down on China
If Alibaba and Tencent are added to the blacklist, it would likely mean that the New York Stock Exchange would delist Alibaba. Tencent trades on the OTC Markets, so it would probably be delisted there. U.S. investors and mutual funds could look to the Hong Kong Stock Exchange to trade both companies if they are delisted in the U.S.—unless they are added to the blacklist by State and Defense Department officials. If that happens, U.S. investors would have until November to sell any shares in the two companies they own.
Trump has been busy during his final days in office, striking out at China to protect Americans. The blacklist that was created in November targets companies believed to be supporting the Chinese military. On Tuesday, the Trump administration banned Alipay, WeChat Pay and other Chinese payment apps.