 "Tencent makes largest share buyback in 20 years after US blacklisting")
Chinese tech giant Tencent Holdings Ltd, the creator of popular games such as Fortnite and Call of Duty, undertook its largest share repurchase on Tuesday after being unexpectedly blacklisted by the US Department of Defense. The blacklisting caused its stock to tumble 7.3 per cent by the end of trading on January 7, prompting the company to announce a substantial share buyback.
Tencent repurchases 3.93 million shares
After the market closed on Tuesday, Tencent revealed it had repurchased 3.93 million shares on the Hong Kong Stock Exchange. The shares were bought at prices ranging from HK$376.8 to HK$392.4 per share, amounting to HK$1.5 billion ($193 million).
This marks Tencent’s most significant buyback since April 2006, nearly 20 years ago, according to Bloomberg data. It also surpasses the approximately $700 million in shares repurchased the previous day.
Tencent’s stock fell 7.3 per cent to HK$379.6 during the trading day, with trading volume surging to HK$54.765 billion, making it the most actively traded stock on the Hong Kong market. However, mainland Chinese investors showed confidence by purchasing HK$14 billion worth of Tencent shares through exchange links with Hong Kong, helping drive prices back up, according to AAStocks.
Blacklisting of Tencent
The selloff was triggered by the US Department of Defense’s decision to include Tencent on its list of Chinese Military Companies (CMC), citing alleged links to China’s military through its “military-civil fusion strategy.” Tencent has denied the allegations, asserting that it is neither a Chinese military company nor a contributor to China’s defense industrial base.
In a filing on the Hong Kong exchanges, Tencent stated:
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“As the Company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the CMC List is a mistake. Unlike other lists maintained by the US Government for sanctions or export control measures, inclusion in the CMC List relates only to US defense procurement, which does not affect the business of the Group.”
Along with Tencent, the world’s largest EV-battery maker, CATL, was also added to the blacklist.
US blacklisting of Chinese firms
This blacklisting is part of a broader US strategy to curb China’s rise as a military superpower. The Pentagon’s designation bars US defence contracts with listed companies starting June 2026 and imposes supply chain restrictions by 2027. This move aligns with Washington’s efforts to limit China’s access to advanced technology, particularly in semiconductors and artificial intelligence.
Tit-for-tat measures
In response, Beijing has tightened its own export controls. Last month, China banned exports to the US of certain critical minerals and metals used in semiconductor manufacturing and military hardware, escalating tech and trade tensions between the two nations.
WeChat to Fortnite: What is Tencent known for?
Tencent is one of China’s largest tech companies, renowned for its flagship messaging app WeChat, which boasts over a billion users. It is also a major player in the gaming industry, holding stakes in companies like Riot Games (League of Legends), Epic Games (Fortnite), and Activision Blizzard (Call of Duty, World of Warcraft), as well as developing its own games like Honor of Kings.
Additionally, Tencent operates Tencent Video, a streaming platform, and offers financial services through WeChat Pay. The company is expanding into cloud computing and artificial intelligence, establishing itself as a global tech powerhouse.