U.S. officials are looking at banning Americans from doing business with Tencent Holdings and Alibaba Group Holding, Bloomberg and others reported Thursday.
Tencent's share price fell as much as 4.5% and Alibaba dropped more than 5% in Hong Kong trading Thursday - tracking declines in their New York-listed securities. The drop dragged down the share prices of China companies JD.com, NIO and Pinduoduo in the U.S., too.
At more than $1 trillion, the combined market value of Tencent and Alibaba's primary listings is almost twice the size of Spain's stock market.
State and Pentagon officials have discussed expanding the blacklist of companies restricted from U.S. investment because of alleged connections to China's military, people with knowledge of the matter said.
"If the bans are imposed then it would be a huge thing for the market," Bloomberg quoted Steven Leung, executive director at Uob Kay Hian (Hong Kong) Ltd., as saying. "After the Biden administration starts, the policy could change again," he said.
Alibaba's New York-listed American depositary shares were down more than 5% late Wednesday while Tencent's ADSs fell around 4% in the U.S. over-the-counter market.
U.S. officials have been escalating efforts to deny Chinese companies access to U.S. capital in the final days of the Donald Trump administration.
The New York exchange earlier said it would ban China Mobile, China Telecom and China Unicom Hong Kong Ltd. following a pair of about-faces on the future of the companies.