Alibaba Group Holding Ltd (NYSE:BABA) and Tencent are in for a rough ride even as President Donald Trump's tenure comes to an end. The two stocks tumbled amid reports the outgoing administration is planning to add the two tech giants to the U.S blacklist.
U.S Blacklist
Alibaba stock fell by more than 4% in line with bearish momentum that has built up in recent weeks. Tencent shares were on the receiving end declining by 4% in Hong Kong. Reports that Washington is planning to bar American investors from investing in the two Chinese companies is the catalyst fuelling the sell-off.
The Trump administration has already banned the Chinese payment app AliPay, which is Alibaba’s financial app, and Tencent’s WeChat Pay from doing business in the U.S. The move comes just weeks after Washington added 31 Chinese companies on the blacklist over concerns about their close connections to the Chinese government and the military.
Late last year, Washington added Chinese drone company DJI to the blacklist as well as Semiconductor Manufacturing International. The addition means the companies cannot do business in the U.S let alone transact with any American company.
The addition of Alibaba and Tencent to the Blacklist will mean American investors will not be able to trade the two stocks. Such a move could result in the delisting of the stocks from U.S stock exchanges. The New York Stock Exchange has already confirmed plans to delist China Mobile, China Telecom, and China Unicorn following their addition to the blacklist.
Alibaba Woes
For Alibaba, delisting in the U.S would add to its woes that have been spiraling out of control. The e-commerce giant is under immense regulatory scrutiny in the aftermath of co-founder Jack Ma criticizing government antitrust regulators in China. The famed billionaire investor has since opted to keep a low profile amid the ongoing scrutiny.
Ma has already had shelved plans to take AliPay public given the ongoing antitrust scrutiny. Similarly Alibaba stock has taken a significant hit, tanking to six months lows in the U.S.