Dubai, United Arab Emirates (CNN) – Alibaba and Tencent shares plunged in Hong Kong on Thursday after reports that they could become the next victims of US President Donald Trump’s campaign against Chinese technology.
Such a move could be a huge shock to Asia’s two most important companies. Alibaba also trades in New York, so if Americans are banned from investing in the company, it may also be written off in the United States.
Hong Kong-listed Alibaba shares fell 3.9%, while Tencent shares fell 4.7%.
It is not clear if the US government will actually pursue its plan. The Wall Street Journal reported that authorities debated whether banning Alibaba and Tencent would have “broad repercussions on the capital markets.” Together, the technology companies are worth more than $ 1.3 trillion.
But Trump has also made clear in recent weeks that his administration is prepared to take the largest possible stand against China before President-elect Joe Biden takes office later this month.
Trump this week signed an executive order prohibiting transactions with eight Chinese apps, including Alibaba, a subsidiary of Alibaba Group, and QQ Wallet and Tencent’s WeChat Pay.
The New York Stock Exchange also said on Wednesday that it will write off 3 Chinese telecommunications stocks in compliance with Trump’s order that prohibits Americans from investing in companies the US government suspects of ownership or control of the Chinese military.
The order, which comes into effect on January 11, bans American investors from owning or trading any securities originating from these companies, as investors will have until November of 2021 to stop dealing with them.