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Chinese tech major Tencent Holding Ltd on Tuesday made its largest share repurchase in 20 years after it was blacklisted for allegedly aiding the Chinese military by the US Department of Justice (DoJ).
The blacklisting caused the stock of the tech giant to tumble 7,3 percent to HKD (Hong Kong Dollar) 379.6 on the Hong Kong Stock Exchange on January 7.
Tencent’s biggest ever 3.98 million shares buyback
After the market closing, however, Tencent bought back 3,99 million shares, for prices ranging between HKD 376.8 and HKD 392.4 per scrip, for a total of HKD 1.5 billion or $193 million
Not only did the buyback exceed the $700 million repurchase it undertook the previous day but it is the largest the company has taken up since April 2006, nearly two decades ago.
Despite the major sell-off, investors from mainland China snapped up HKD 14 billion worth of the company’s shares, as per AAStocks.
The company was also the most actively traded stock on the Hong Kong Stock Exchange on Tuesday, with volume climbing to HKD 54.765 billion.
On Monday, the Biden Administration included Tencent Holdings, battery maker Contemporary Amperex Technology Co. Ltd (CATL) and a dozen other Chinese companies on its Chinese military companies list.Tencent calls inclusion in the list a “mistake”
Tencent denied the allegations stating,
“As the company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the CMC List is a mistake.
Unlike other lists maintained by the US Government for sanctions or export control measures, inclusion in the CMC List relates only to US defense procurement, which does not affect the business of the Group.”
The list includes firms the DoJ alleges are working directly or indirectly with the People’s Liberation Army or contributing to its industrial base. The list under article 1260H aims to restrict these companies’ interactions with the US and curb Chinese technological and military advancements.
The annually updated 1260H list now includes 134 firms, as per notice by the Federal Register.
“The US’s practices violate the market competition principles and international economic and trade rules that it has always advocated, and undermine the confidence of foreign companies in investing and operating in the United States,” Liu Pengyu, a Chinese embassy spokesman said, according to the BBC.
In December 2024, Beijing banned the exports of key semiconductor elements including gallium, antimony and germanium, to the US.
This has escalated the tensions between the two nations.
Formed in 1998, Tencent is a holding company based in Shenzhen, China. It is the parent firm of the instant messaging app WeChat and the creator of games such as Fortnite, Call of Duty and World of Warcraft, among others. — Upstox
Online Reporter