image

Tencent

Tech firms and banks top list of Asia’s 10 largest companies

Tencent overtakes China Mobile to become Asia’s largest company by market capitalisation. Tencent also joins ranks of the world’s 10 largest companies

PUBLISHED : Tuesday, 06 September, 2016, 3:45pm
UPDATED : Tuesday, 06 September, 2016, 10:59pm

As Chinese online major Tencent Holdings overtook China Mobile to become Asia’s largest company by market capitalisation on Monday, tech companies and banks now account for the majority of the region’s ten most valuable companies.

Tencent jumped ahead of China Mobile to become the region’s largest company by share value.

It also ranked tenth worldwide, joining an elite league that includes corporate giants Apple, Microsoft, Amazon.com, Facebook, Exxon Mobil, among others.

Shares in Tencent gained 4.2 per cent on Monday to close at a record HK$210.2, lifting its market cap to US$256.6 billion.

On Tuesday the shares advanced 2.3 cent to close at HK$215. So far this year, the stock has surged about 40 per cent, outperforming the Hang Seng Index, which is up 8 per cent over the same period.

“Of course the rally is a good thing. Tencent stock is part of our portfolio assets. The share rise means we can offer better returns for our investors,” said James Zhao, a Beijing-based fund manager for CCB Principal Emerging Market Select Stock Fund, and CCB Principal Global Opportunities Fund.

The emerging markets fund manages US$9.4 million of assets and currently holds 50,000 shares of Tencent, while the global opportunities fund has US$3.6 million assets under management and holds 10,000 shares in Tencent, according to data from Reuters.

“The stock market is rewarding Tencent, as the company has done well in the first half of the year,” Zhao added.

Last month, Tencent reported its first-half revenues jumped 48 per cent to 67.7 billion yuan and net profit rose 41 per cent to 20.1 billion yuan, beating market expectations.

JP Morgan recently gave a buy rating to Tencent’s stock, with a target price of HK$260.

Analysts from the investment bank said Tencent’s mobile games business has grownfaster than expected and estimated the company’s stock could reach HK$300 in the long run, driven by increasing advertising revenues.

Deutsche Bank has a buy rating for Tencent and a target price of HK$213 per share, saying that cooperation between Tencent and e-commerce firm JD.com as well as ride hailing app Didi would drive revenue growth.

China Mobile took second place on Asia's top 10 list with a market capitalisation of US$253.6 billion, based on its ADR share closing price in the previous trading session.

The telecom company said last month it swung to a net profit of 60.6 billion yuan in the first half, up 5.6 per cent year-on-year. Its ADR shares were virtually flat in the past month, but up 10 per cent this year.

Chinese e-commerce giant Alibaba Group, which is listed in New York, ranked third with a market value of US$245.5 billion. Its shares have also risen since early August when it posted a better-than-expected 59 per cent increase in revenue for the fiscal first quarter. In the past month its shares gained approximately 20 per cent, lifting its gain since the start of the year to 22 per cent.

Of the top 10 Asian companies, four are state-owned Chinese banks, including ICBC, China Construction Bank, Agricultural Bank of China, and Bank of China.

Chinese companies account for 80 per cent of Asia’s top 10.

Alibaba is the owner of the South China Morning Post.

business-article-page