Shares in Xiaomi Group, the Chinese electronic appliances maker, plummeted on Friday after being listed on an investment ban by outgoing U.S. President Donald Trump.

Xiaomi is among nine Chinese companies newly listed for allegedly having links to the Chinese military. Earlier this week, Trump updated an executive order requiring all U.S. investors to “completely divest” their shares in the listed Chinese companies by Nov. 11 this year.

Observers suspect the policy directive may be designed to create difficulties for the incoming administration of President Joe Biden in its relations with Beijing.

Shares in Xiaomi dropped by 10.26% to HK$29.3 (US$3.78) at Friday closing.

Xiaomi issued a statement saying it sells products purely for “commercial” and “civilian” use. “[The company] is not owned, controlled or affiliated with the Chinese military, and is not a ‘Communist Chinese Military Company’, it said.

Despite the ban, the rating agency Moody’s Investors Service said it will not immediately downgrade Xiaomi. “While the development is credit-negative for Xiaomi, it will not have an immediate impact on the company’s rating given its strong net cash position and solid operating performance,” Moody’s said in a report.

“Xiaomi’s liquidity profile is excellent, with a net cash position, excluding lease liabilities, of 26 billion yuan as of 30 September 2020,” the report said.

Many of its major investors have an American background. They include BlackRock (2.23%), Vanguard Group (2.08%), State Street (0.96%) and Fidelity Investments (0.23%). American interests are holding around HK$40 billion in Xiaomi shares, according to an estimate by Apple Daily.

Alvin Cheung, an associate director at Prudential Brokerage, told Apple Daily that the ban might have an immediate impact on Xiaomi’s share price. But he suspects bargain-hunting Chinese investors may soon drive the share price back up.

Other newly listed companies included semiconductor microfabrication equipment AMEC, China National Aviation and Beijing Zhongguancun Development Investment Center, a firm associated with Beijing’s technology hub Zhongguancun.

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