Chinese tech giants Alibaba, Tencent, and Baidu are in the clear for U.S. investment after deliberation by the Trump administration.
The news, as reported by The Wall Street Journal in the afternoon Wednesday, sent two of the stocks higher. Alibaba Group (NYSE: BABA; HKEX: 9988) gained 4% to $235.30 per share and Tencent Holdings (OTC: TCEHY; HKEX: 0700) jumped 3% to $78.43. Baidu (Nasdaq: BIDU), briefly tipping in the green after the report, ended the day 1% lower, at $236.94 per share.
Blacklisting the three conglomerates would not only heighten the Sino-American tensions but also lead to large sell-offs and significant volatility, the Treasury department argued, as reported by Forbes.
Meanwhile, nine other Chinese firms were confirmed for blacklisting. They have not yet been publicly disclosed.
The decision follows the delisting of China’s top telecoms China Telecom Corp. Ltd. (HKEX: 0728), China Mobile Ltd (HKEX: 0941) and China Unicom Hong Kong Ltd. (HKEX: 0762) earlier this week by the New York Stock Exchange. The NYSE announced the move on the last day of 2020, reversed its announcement in early January, then went ahead with the plan after Treasury Secretary Steven Mnuchin argued against the reprieve.
President Donald Trump signed an order in November banning American investment in companies it alleges have ties to the Chinese military. The blacklist of “Communist Chinese military companies” has been condemned by Beijing, which has threatened countermeasures.
Potentially, the next to face delisting might be oil stocks like CNOOC Ltd. (NYSE: CEO; HKEX: 0883), PetroChina (NYSE: PTR; HKEX: 0857), and Sinopec, or China Petroleum and Chemical Corp. (NYSE: SNP; HKEX: 0386).