Pentagon List Includes Tencent, Impacting Stock Value
Tencent, a Chinese tech giant, has been added to the Pentagon's list of companies with ties to the Chinese military (PLA). This follows a 2020 executive order by President Trump restricting US investment in such entities. The list, maintained by the US Department of Defense, identifies companies believed to contribute to PLA modernization through technology, expertise, or research. While initially featuring 31 companies, the list has expanded since its inception, leading to the delisting of several companies from the New York Stock Exchange.
Tencent's inclusion, announced January 7th, prompted an immediate response. A Tencent spokesperson issued a statement to Bloomberg, asserting that Tencent is neither a military company nor supplier, and that the listing doesn't directly affect its operations. However, the company intends to collaborate with the Department of Defense to clarify any misunderstandings.
This development follows the recent removal of several companies from the list due to no longer meeting the designation criteria. Previous instances show companies successfully removing themselves through cooperation with the DOD, suggesting a similar strategy for Tencent.
The announcement caused a noticeable decline in Tencent's stock value. A 6% drop on January 6th, and subsequent downward trends, are attributed by analysts to this listing. Given Tencent's global prominence—the world's largest video game company by investment and a major player overall—its inclusion and potential removal as a US investment option carry significant financial implications.
Tencent's vast gaming portfolio, managed through Tencent Games, dwarfs competitors like Sony. The company holds stakes in numerous renowned studios, including Epic Games, Riot Games, Techland (Dying Light), Dontnod (Life is Strange), Remedy Entertainment, and FromSoftware, further highlighting its influence on the global gaming landscape and beyond. Tencent Games' investments also extend to other key players like Discord.
