U.S. officials consulted, but ultimately decided to invest in U.S. Alibaba Group Holding Ltd. and A person familiar with the discussions, says Tencent Holdings Ltd., which removes a cloud of uncertainty over the two largest companies in Asia.
The Treasury has blocked an attempt by the Pentagon to add the two Internet businesses on the grounds that they are helping the military, the person said, asking not to be identified during the discussion of private conversations. Officials also debated search leader blocking Baidu Inc. but abandoned the plan, the person added. Alibaba’s share in Hong Kong climbed to 3.9%, while Tencent rose almost 5% on news of the postponement, first reported by the Wall Street Journal. Their dollar bonds spread stricter Thursday morning.
The decision removes uncertainty over Chinese social media and gaming leader Tencent and Alibaba, the e-commerce titan founded by billionaire Jack Ma and now under strict regulatory scrutiny by Beijing regulators. President Donald Trump has signed an amended version of his executive order banning investment in Chinese military enterprises, the White House said in a statement. statement Wednesday in which no company was named.
The imposition of a ban on the couple would have resulted in the most dramatic increase by the outgoing government, given the large size of the two businesses and the difficult position to switch off. At more than $ 1 billion, their combined market value is almost twice the size of the Spanish stock market, while the companies together hold a tenth of the weight for MSCI Inc. ‘s benchmark for emerging markets.
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Referring to national security, Trump signed an executive order earlier in November requiring investors to pull Chinese companies linked to the country’s military. The Department of Defense will add more companies to the roster, the person said without expanding.
This would further break the relationship between the two largest economies, which clashed over everything from Covid-19 to Hong Kong. Authorities in Washington have made efforts to deprive Chinese companies of US capital in the last months of the Trump administration, which has contributed to economic tensions as President-elect Joe Biden prepares to take over this month.
Hasty measures sometimes caused confusion in the markets and caused price fluctuations, such as when the New York Stock Exchange twice overturned the decision to delist three Chinese telecommunications companies. The NYSE is now continuing with its original delisting plan after US Treasury Secretary Steven Mnuchin disagreed with his decision to postpone the ventures.
Trump’s order bans trading in affected securities from Jan. 11. If Biden enforces Trump’s executive order, U.S. investment firms and pension funds will be required by November 11 to sell their stake in companies linked to the Chinese military. And if the U.S. determines that additional companies have military ties in the future, U.S. investors will have 60 days to sell off some of the determination.
– With help by Catherine Ngai
(Updates with Hong Kong action and map from the second paragraph)