Shares in China’s two largest companies Alibaba and Tencent in Hong Kong fell Thursday in response to media reports that the Trump administration plans to move ahead with a ban on Americans investing in them.
Alibaba’s e-commerce titan sank more than 4 percent and Tencent’s internet powerhouse lost 3.3 sheds in morning trading after the Wall Street Journal reported that officials in several government departments were assessing the impact of an investment ban.
Such a move would be another blow to Alibaba, which has come under pressure from Chinese officials with regulators last month launching an anti-monopoly probe, while the fintech giant was ordered Ant Group dramatically changed their business model.
The moves come as the government puts pressure on the once incomparable Jack Ma empire.
A Wall Street Journal report came the same day that the New York stock exchange reversed and said it would withdraw three Chinese telecom equities from trading because of new U.S. government guidance.
Wednesday’s news ended a few sad days of flip-flopping where the stock exchange announced their removal at the weekend before making a U-turn on Monday and then saying it would It on once more Wednesday.
The latest decision came after Finance Secretary Steven Mnuchin agreed to return on Monday.
All three state-owned telecom giants fell, with China Unicom shrinking nearly eight percent while China Telecom was down seven percent and China Mobile slipped 5.7 percent.
Trump issued an action order in November prohibiting Americans from investing in Chinese companies deemed to supply or support the country’s military and security equipment, earning sharp refund from Beijing.
On Tuesday night he signed an action order banning transactions involving Alipay, WeChat Pay, and other apps linked to Chinese companies, drawing strong criticism from Beijing.
Alipay is owned by Alibaba and WeChat is owned by Tencent.
The Wall Street Journal report said officials at the State Department, the Department of Defense and the Department of the Treasury had all considered how to ban investment on the two Chinese e-commerce giants.
Any ban could have a major impact on U.S. markets.
While the three Chinese telecommunications companies are relatively small divisions for the New York Stock Exchange, Alibaba and Tencent are the two largest companies in China.
At $ 1.4 trillion, the unified market value of their top listings is twice that of the Spanish stock market, according to Bloomberg News.
“If the ban is implemented it would be a big deal for the market,” Steven Leung, executive director at Uob Kay Hian (Hong Kong) told Bloomberg.
“It’s still too early to say. After Biden’s administration began, the policy could change again.”