U.S. officials deliberated, but eventually decided to ban U.S. investment Alibaba Group Holding Ltd. i Tencent Holdings Ltd., a person familiar with the discussions, said it removed a cloud of uncertainty about the two major Asian companies.
The Treasury Department blocked the Pentagon’s effort to add the two Internet companies for reasons that helped the military, the person said, asking that they not identify themselves in private conversations. Officials also debated the search leader’s blockade Baidu Inc., but abandoned the plan, the person added. Alibaba’s shares in Hong Kong rose to 3.9%, while Tencent rose nearly 5% in news of the recovery, which was first published by the Wall Street Journal. Their dollar bonds differ narrow Thursday morning.
The decision removes the uncertainty that emanates from Chinese social media and gaming leader Tencent and Alibaba, the e-commerce titan founded by billionaire Jack Ma who is now under intense regulatory control by Beijing regulators. President Donald Trump has signed an amended version of his executive order banning investment in Chinese military companies, the White House said in a statement Wednesday that did not mention any company by name.
The imposition of the pair ban would have marked the most dramatic escalation to date by the outgoing administration, given the large size of the two companies and the difficulty in developing positions. In addition to $ 1 trillion, its combined market value is almost double that of the Spanish stock market, while joint ventures account for about a tenth of the The benchmark for emerging markets of MSCI Inc.
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Citing national security, Trump previously signed an executive order in November requiring investors to withdraw Chinese companies linked to that nation’s military. The Department of Defense will add more companies to the list, the person said without elaborating.
This would further erode the relationship between the two largest economies in the world, which have clashed mostly, from Covid-19 to Hong Kong. Washington authorities have intensified efforts to deprive Chinese companies of U.S. capital in the last months of the Trump administration, adding to economic tensions as President-elect Joe Biden prepares to take over this month.
Acute measures have sometimes sown confusion in markets and led to price changes, such as when the New York Stock Exchange reversed course in the decision to withdraw three Chinese telecommunications companies. The NYSE continues its original withdrawal plan after U.S. Treasury Secretary Steven Mnuchin disagreed with his decision to give a deal to companies.
The Trump order banned trading in affected securities as of Jan. 11. If Biden leaves Trump’s executive order, U.S. investment firms and pension funds should sell their stakes in Chinese military-linked companies before Nov. 11. determines that additional companies will have military ties in the future, US investors will have 60 days from this determination to divest.
– With the assistance of Catherine Ngai
(Updates with the Hong Kong action and chart in the second paragraph)