Tencent earnings report may offer answers into China regulatory threat that erases US$170 billion of value from January peak
- Stock has slumped 18 per cent since reaching a record-high of HK$766.50 in January as China tightens regulations on internet platform businesses
- Billionaire founder Pony Ma and his lieutenants face questions on China’s intentions after a clampdown on Jack Ma’s business empire
The nation’s top watchdogs have stepped up oversight of its most valuable company, scrutinising everything from Tencent’s insights into the online behaviour of a billion-plus people to an investment portfolio that spans hundreds of start-ups.
Regulators are said to be considering forcing Tencent to overhaul a promising fintech division, folding the operation into a holding company in much the same way they are demanding of Jack Ma’s Ant Group.
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“Tencent is all too familiar with the spectre of additional regulation over its gaming business,” said Michael Norris, research manager at Shanghai-based consultancy AgencyChina. “Investors may query the extent to which anti-monopoly scrutiny may inhibit Tencent’s investment activities, in gaming or other verticals.”
The threat of a probe has already wiped US$170 billion off the company’s market value since the stock closed at a record HK$766.50 on January 25. In the short-run, investors are betting on another robust showing from a company whose profit has surpassed expectations in three of the past four quarters.