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Investing.com -- Shares of major Chinese tech companies dropped sharply Wednesday after Bloomberg reported they were identified for potential addition to a Pentagon list of firms aiding China’s military.
Alibaba Group Holding Ltd. traded 0.9% lower, reversing earlier gains, Baidu Inc. fell 1.4%, while BYD Co. declined 0.5%, also giving up previous advances.
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According to the report, Deputy Defense Secretary Stephen Feinberg informed congressional leaders in an October 7 letter that Alibaba , Baidu, and BYD should be added to the Pentagon’s "1260H list," which identifies companies connected to the Chinese military operating in the United States.
The letter, addressed to the heads of the House and Senate Armed Services Committees, also named five additional companies for potential inclusion: Eoptolink Technology Inc., Hua Hong Semiconductor Ltd., RoboSense Technology Co., WuXi AppTec Co., and Zhongji Innolight Co.
While inclusion on the 1260H list carries no direct legal consequences, it serves as a significant warning to U.S. investors.
The Pentagon’s determination came approximately three weeks before U.S. President-elect Donald Trump and Chinese President Xi Jinping reached a broad trade agreement