Shares of major Hong Kong-listed Chinese technology companies fell sharply on Friday after an updated U.S. roster that had named Alibaba, Baidu and electric vehicle maker BYD was pulled minutes after its publication.
The Pentagon had issued an amended Section 1260H list earlier this week that included those three firms, but the list was withdrawn shortly after release and declared unpublished. Despite the retraction, the temporary inclusion triggered immediate market reaction.
By the midday break, Alibaba Group Holding Ltd had slipped 3.6%, while Baidu Inc had declined 5.5%. Those two declines represented some of the largest downward contributions to the Hang Seng Index, which itself was down about 0.5% on the session. BYD Co fell 1.6%. Tencent Holdings Ltd, which the list added in early-2025, also retreated by a similar margin.
Market participants said the moves were amplified by a degree of catch-up selling after Hong Kong markets reopened following a three-day holiday. Global technology stocks had experienced sharp declines during the holiday interval, leaving some pent-up selling pressure for local-listed names when trading resumed.
Beyond the immediate worry over potential U.S. sanctions implied by the list, investors were also weighing concerns that margins at large Chinese technology firms could be squeezed by heavy investment in artificial intelligence. That dynamic has put pressure on some U.S. technology peers in recent weeks as well. Alibaba's shares fell even though the company rolled out its new Qwen3.5 AI model earlier this week.
The confluence of the fleeting Section 1260H listing, the catch-up effect after the holiday break, and investor concern about rising AI-related expenditures combined to produce notable volatility across the sector on Friday.
Related market sectors: Technology, Automotive (electric vehicles), Equity markets.