Naspers shares slid sharply by over 9% on Tuesday morning, while those of its Europe-based subsidiary Prosus fell 8.75% on the JSE, after the US Defence Department said Tencent Holdings was operating for the Chinese military in the US.
China technology group Tencent was among several companies that were labelled as Chinese military entities in a Federal Register filing, according to an online report by TechCentral.
The report, which said Tencent had not by then responded to a request for comment, stated that companies on the Chinese military list face delisting from US exchanges and deletion from global benchmark indexes. Naspers and Prosus hold about 25% of Tencent,
Prosus shares were trading 8.73% lower to R678.67 on the JSE Tuesday morning, a price still comfortably ahead of the R553.82 it traded at a year previously.
Naspers shares traded 0.73% lower at R3755.39 on Tuesday morning, higher than R3040.50 traded at a year ago.
The Chinese military company list comes from an order signed by US President Donald Trump in late 2020 that barred American investment in Chinese firms owned or controlled by the military.
Tencent is one of the most valuable tech companies in China and is the single biggest contributor to Naspers' profits. Naspers and Prosus are, however, working hard to improve the profitability of its other global internet businesses.
Naspers' earnings report for the year to March 31, 2024, showed consolidated revenue from continuing operations grew by 8% to $6.8 billion, with significant contributions from Food Delivery and Payments and Fintech. Trading losses increased to $844 million from $684 million the previous year.
Tencent’s Hong Kong-listed shares had gained more than 42% last year. Some Chinese firms have successfully fought to be removed from the US list, including the Chinese smartphone group Xiaomi in 2021, reports said.