Shares of Tencent Holdings fell by 5.4% in Hong Kong on Monday after the US Department of Defense classified the company as a “Chinese military company.”

The company’s US depository receipts had previously declined by about 8%.

Battery maker CATL, also named on the list, saw its Shenzhen-listed shares decline by as much as 5.6%, before recovering slightly to a 3.5% decrease.

The designation is part of the National Defense Authorization Act of 2024, which prevents the Department of Defense from procuring goods or services from the listed companies starting in June 2026. Indirect procurement will cease by June 2027.

Both Tencent and CATL denied any military connections, with Tencent calling its inclusion was “clearly a mistake” and CATL describing it as an error.

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