By Najat Kantouar
Shares of Prosus, Tencent's largest shareholder, fell after the Pentagon labeled the Chinese tech giant as military in nature.
In early European trading, Prosus shares fell 1.75% to 35.0 euros. However, they are up 28% over the past 12 months. Tencent's U.S.-listed shares dropped almost 8% after the Pentagon announcement on Monday.
According to FactSet, Prosus has a 24% shareholding in the Chinese tech giant.
The Pentagon added a number of well-known Chinese businesses to a list of companies it identifies as military in nature, reflecting its assessment that China fuses commercial and military technology.
A spokesman for Tencent said its inclusion is clearly a mistake. "We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding."
This marks the first time Tencent has faced such direct scrutiny, AlphaValue analyst Saima Hussain wrote in a note. "While the designation doesn't impose legal sanctions, it raises reputational risks and fears of potential operational disruptions," the analyst said.
Citi analysts noted that Prosus's stake in WeChat owner Tencent represents around 75% of the Amsterdam-listed investment group's net asset value, which leaves it well-exposed to any change in the region.
Write to Najat Kantouar at najat.kantouar@wsj.com
(END) Dow Jones Newswires
January 07, 2025 05:22 ET (10:22 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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