THE NEUTRAL ZONE
The United States is considering measures that will prevent Americans from investing in China’s two most valuable publicly traded companies. The ban of Alibaba Group Holding Ltd. and Tencent Holdings Ltd. would add the two companies to the U.S. government’s blacklist of Chinese companies.
News that the Trump administration was considering this move prompted Alibaba and Tencent shares to drop, with Tencent slipping 4.69% to 568.5 Hong Kong dollars and Alibaba falling 3.91% to 221 at the closing bell of the Hong Kong stock exchange. This development comes on the heels of Trump signing an executive order banning eight Chinese apps in the U.S., including Alibaba affiliate Ant Group’s Alipay as well as Tencent-owned QQ Wallet and WeChat Pay. The banning of these apps, as well as the potential blocking of China’s two biggest companies, is a part of the outgoing Trump administration’s attempt to take a hard economic stance on China before President-elect Joe Biden takes office.
China responded Thursday that they would take necessary measures to protect China’s economic interests and companies rights. Chinese Foreign Ministry Spokesperson Hua Chunying tweeted, “A handful of anti-China politicians in the #US have been staging a final show of madness. They’ll stop at nothing to sabotage China-US relations for selfish gains. Such acts will surely be punished by history.” Hua also tweeted, “The #US shall pay a heavy price for its wrong actions.”
This section includes an aggregation of articles showing different viewpoints on the topic.
U.S. Considers Adding Alibaba, Tencent to China Stock Ban – The Wall Street Journal – 1/7/2021
State and Defense Department officials in recent weeks have discussed expanding a blacklist of companies prohibited to U.S. investments over alleged ties to China’s military and security services, according to people familiar with the matter. The U.S. government announced its original blacklist in November with 31 companies.
Alibaba & Tencent Tape Bomb Bought In Size – Forbes – 1/7/2021
Yes, Tencent and Alibaba Hong Kong fell overnight -4.69% and -3.91% as the headlines shook out weak hands. Just yesterday I mentioned how tracking Southbound Connect, the trading venue for Mainland investors accessing Hong Kong stocks, was a great indicator to track. Yesterday, Mainland investors bought $601 million worth of Tencent stock via Southbound Stock Connect.
Alibaba, Tencent Shares Drop as U.S. Weighs Investment Ban – Bloomberg – 1/7/2021
Imposing a ban on the two companies would mark the most dramatic escalation yet by President Donald Trump’s administration, given the sheer size of the two firms and the difficulty unwinding positions. At $1.3 trillion, the combined market value of their primary listings is nearly twice the size of Spain’s stock market, while the firms together account for about 11% of the weighting for MSCI Inc.’s emerging markets benchmark.
US investors with US$1 trillion of Chinese stocks in trouble as ban nears – South China Morning Post – 1/7/2021
That will probably cause a shake-out in the portfolios of Chinese stocks owned by US investors. Half of the US$1 trillion holdings are held via American depositary receipts (ADRs), and mutual funds and hedge funds account for 86 per cent of the total exposure, according to data by Goldman Sachs.
This section includes an aggregation of tweets showing different viewpoints on the topic.