Other Chinese companies added to the list included battery maker CATL, which is part of the supply chain for automakers like Ford and Tesla.

HONG KONG -- The share prices of Chinese tech conglomerate Tencent Holdings and battery maker Contemporary Amperex Technology (CATL) fell sharply on Tuesday, after they were added to a Pentagon list of companies with alleged ties to China's military.

The U.S. Defense Department said on Monday it has added Chinese tech giant Tencent Holdings and battery maker CATL to a list of companies it says work with China's military, in a move set to escalate U.

The United States has labeled additional Chinese tech and social media firms as Beijing military companies, including multimedia firm Tencent and battery maker Contemporary Amperex Technology, better known as CATL.

Following the announcement, Tencent's shares dropped by 7.8% in Hong Kong, while CATL's stock saw a 6% decline in Shenzhen.

Tencent, known for its messaging app WeChat, and CATL, the world’s largest battery maker, have both reportedly denied any military connections, labeling their inclusion as a mistake. Tencent's spokesperson is said to have emphasized that the designation would not impact its business operations, while CATL echoed similar sentiments.

The US Defense Department has added Chinese tech giant Tencent Holdings and battery maker CATL to a list of companies it says work with China's military, in a move set to escalate US-China tensions.

Tencent Holdings Ltd. slid in US trading on Monday after the Defense Department designated the technology firm a Chinese military company operating in the US.