As reported by the Wall Street Journal, State and Defense Department officials held discussions recently regarding the expansion of a blacklist of companies prohibited from US investments. The U.S. government announced its original blacklist in November with 31 companies.
When Ant's Initial Public Offering, or IPO, was suspended in early November 2020 on the Shanghai and Hong Kong stock exchanges, the former released a statement, broadly echoed by Ant itself, that the step was a result of "material matters relating to the regulatory interview of senior executives" and "recent changes" in the Fintech regulatory environment.
MARKET REACTION * Money managers say selling of banned shares by USA investors could weigh on prices in the short term, but do not see big consequences yet and say that fine print could allow them to get around some of the trade restrictions.
The blacklist is one of several Trump administration efforts related to investing in Chinese firms.
The Trump administration also has imposed curbs on access to US technology for Chinese telecom equipment maker Huawei and some other companies.
At US$1.4 trillion (RM5.7 trillion), the combined market value of their primary listings is twice the size of Spain's stock market, according to Bloomberg News. "After the Biden administration starts, the policy could change again".
Alibaba and Tencent did not immediately respond to Reuters requests for comment. It allows US authorities to remove foreign firms from stock exchanges if they fail to comply with USA audit rules for three years.
In recent years, scores of Chinese tech companies have raised tens of billions of dollars from USA and global investors, allowing foreign investors to capitalize on China's fast-growing economy. Spreads on Tencent's dollar bonds widened as much as 20 basis points over Treasuries on Thursday, while those on Alibaba notes were about 15 basis points wider, according to credit traders. Similarly, the two together claimed a 12% weighting in the FTSE Emerging Index as of December 31.
The State Department in August said the US needs to address threats posed by cloud-based systems run by Alibaba, Tencent and Baidu Inc. In addition to the regulatory demands for Ant Group and investigation into Alibaba, authorities have warned other tech representatives against creating monopolies and abusing consumer data for profit. Over the years, Tencent has made a series of small investments in the USA and other Western countries. In recent months, officials blocked Ant Group Co.'s $35 billion IPO, proposed new rules to curb the dominance of internet giants and fined Alibaba over acquisitions from years before.
However, with Alibaba reportedly planning to raise as much as US$8 billion through the sale of USA dollar bonds later this month, it is unclear how a United States ban would impact the firm's fundraising efforts.
Investors have shifted holdings of Chinese firms out of USA listings, saying there is a risk that more Chinese companies could be affected.
The order escalated a conflict with Beijing over technology, security and spying accusations that has plunged U.S.