Technology Stocks

The US Is Not Banning Investors From Baidu Inc. (NASDAQ:BIDU), Alibaba (NYSE:BABA), and Tencent Holdings (OTCMKTS:TCEHY)

The US government has indicated that it will not ban Americans from investing in Chinese tech companies Baidu Inc. (NASDAQ:BIDU), Alibaba Group Holding (NYSE:BABA), and Tencent Holdings (OTCMKTS:TCEHY). This comes after the government weighed the companies’ connection to the Chinese military compared to the economic impact of banning them.

Nine more firms included in “Communist Chinese military firms”

The three tech giants were among the companies the Department of Defence was examining for inclusion into a list of companies supporting China’s security services, intelligence, and military. The department has indicated that it will add nine firms to the “communist Chinese military companies” bringing the total to around 40 firms. Others include China Mobile, China Telecom, and smartphone manufacturer Huawei. American investors now have until November to dispose of any holdings held in the firms on the list.

Despite contrary reports, the government will not add the tech giants whose combined market capitalization is $1.4 trillion to the list following pushback from US Treasury Secretary Steven Mnuchin. There were concerns within Treasury that a ban on the companies could trigger economic fallout prompted by massive selloffs in the Chinese companies. In November President Donald Trump had issued an order barring Americans from investing in the companies as of January 11.

Banning Alibaba, Baidu and Tencent could lead to the economic fallout

According to people familiar with the matter, the list of nine firms added to the “Communist Chinese military companies” will be out soon. A spokeswoman of the State Department said that the list is not final and as a result, they could not comment on matters that are still under deliberation.

Officials agreed not to include the companies in the list after a meeting with top officials from the State Department, Pentagon, National Security, and Treasury. Pentagon and State Department believed that they had a compelling case against the companies to be on the list after ironing out administrative kinks. However, Mnuchin disagreed stating that a ban on the markets will destabilize markets and lead to economic fallout.

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