Recently, U.S. officials thought about banning U.S. investments in Alibaba Group Holdings Limited and Tencent Holdings Limited but eventually decided to remove the movement of possibility about the two largest companies in Asia.
According to the report, the Treasury Department said that he had prevented an attempt by the Pentagon to merge the two Internet companies on the basis of assistance to the military and that private meetings should not be recognized. Authorities discussed blocking search leader Baidu Inc. but withdrew the plan. Alibaba’s Hong Kong stock rose 3.9 percent and Tencent 5 percent, as previously reported by the Wall Street Journal. Their dollar bond expansion strengthened.
The settlement removes uncertainty on Chinese social media and gaming leaders Tencent and Alibaba, the e-commerce titan founded by billionaire Jack Ma, are now under intense scrutiny by Beijing regulators. The US President has signed a revised version of an executive order banning investment in China’s military-linked companies, with the White House not naming any companies in a statement.
The ban on the pair represents the most dramatic increase in the size and position of both companies by a going-to-go administration given the difficulties in vacating positions. With over a trillion dollars, their combined market value is close to double the size of the Spanish stock market, while the companies together make up one-tenth of MSCI Inc.’s emerging market benchmark.
It will further erode the relationship between the two largest economies in the world, which have clashed everything from Covid-19 to Hong Kong. In the last months of the Trump administration, Washington officials have stepped up efforts to plunder US capital Chinese companies, and economic stresses have risen as President-elect Joe Biden prepares to take office this month.
The haste, such as the two-way reversal of the New York Stock Exchange in its decision to exclude three China telecommunications companies, has at times caused confusion in markets and led to inflation. NYSE is moving ahead with its original delisting plan after US Treasury Secretary Steven Muchin disagreed with the companies’ decision to grant the review.
Trump’s order has banned trade in affected securities since Jan. 11. If Biden rescinds Trump’s executive orders, U.S. investment firms and pension funds will have to sell their stakes in companies linked to the Chinese military by November 11. Future stalemates give U.S. investors 60 days to pull out of that decision.