By Gina Lee
Investing.com – Chinese smartphone manufacturer Xiaomi (OTC:XIACF) Corporation saw its shares plunge after U.S. President Donald Trump’s administration added it to a blacklist of Chinese companies with ties to the military.
Xiaomi Corp (HK:1810) plunged 12.40% to HK$28.60 ($3.69) by 12:21 AM ET (5:21 AM GMT).
The company was one of nine added to the Defense Department’s blacklist, in a final move to ratchet up pressure on China before President-elect Joe Biden takes office. State-owned planemaker Commercial Aircraft Corp. of China Ltd., or Comac, Luokong Technology Corp., Gowin Semiconductor Corp., Global Tone Communication Technology Co. and Advanced Micro-Fabrication Equipment Inc. were also among the nine to make it onto the list.
Under an executive order signed by Trump in November 2020, U.S. investors will have to unwind stakes in any company on the Defense Department list by Nov. 11, 2021.
“Ample warning has been given to the public about the material risks associated with investments” identified in Trump’s executive order, State Department’s undersecretary for economic growth, energy and the environment Keith Krach said on Thursday.
A Xiaomi statement said that it is not owned or controlled by the Chinese military, adding that it would take appropriate actions to protect its interests. However, the company faces being delisted from U.S. exchanges and deletion from global benchmark indexes unless it is removed from the blacklist.
China Mobile (NYSE:CHL) Ltd., China Telecom (NYSE:CHA) Corp. and China Unicom (NYSE:CHU) Hong Kong Ltd. were all removed by MSCI Inc. during the previous week thanks to their inclusion on the list.
Co-founded by billionaire entrepreneur Lei Jun, Beijing-based Xiaomi is one of China’s more recognizable brands. Viewed as China’s answer to Apple Inc (NASDAQ:AAPL)., it makes electric scooters, earphones and smart rice cookers alongside its flagship smartphones. It competes with Huawei Technologies Co. for the title of China’s No. 1 mobile device brand and took grabbed market share from Huawei as U.S. sanctions on Huawei also deepened.
Meanwhile, the Commerce Department added China National Offshore Oil Corp. (CNOOC (NYSE:CEO)), the country’s main deepwater explorer, to its own blacklist. The move follows the decision to blacklist more than 60 other Chinese companies in December 2020.
The reason for CNOOC’s inclusion in the list is its operations in the South China Sea. China’s claim of drilling rights in the area have soured relations with other countries laying claim to the body of water, including Vietnam and the Philppines.