Tech turmoil dumps Tencent out of US$500 billion club

Chinese internet giant, Samsung and Taiwanese chip maker TSMC lose combined US$35 billion in market value

PUBLISHED : Thursday, 30 November, 2017, 3:28pm
UPDATED : Friday, 01 December, 2017, 10:31am

Tencent Holdings was pushed out of the half-a-trillion-dollar club after just 10 days, as declines in tech stocks spread from the United States to Asia on Thursday.

The Chinese internet giant had US$16.5 billion wiped off its value after its shares fell by 3.3 per cent to HK$398 (US$51) at close of trade in Hong Kong.

The company became Asia’s first company to exceed half a trillion US dollars in capitalisation on November 20. On Thursday its market cap stood at US$484 billion.

It also contributed 118 points – or 26 per cent – towards the losses on the Hang Seng Index, which dropped 446.48 points, or 1.5 per cent, to finish at 29,177.35 on Thursday. Shares worth HK$22.4 billion changed hands, the most for a single stock on the Hong Kong market.

Other tech giants in the region, such as Samsung Electronics, Taiwan’s chip maker TSMC and Japan’s Tokyo Electron, all had steep falls.

Samsung fell 3.4 per cent to 2.54 million won (US$2,336), its lowest level since September 15. It lost US$10.68 billion in value. TSMC, or the Taiwan Semiconductor Manufacturing Company, slid 3.6 per cent to end at NT$226 (US$7.5), erasing US$7.34 billion in market cap.

In Japan, Tokyo Electron lost 1.1 per cent to 20,760 yen (US$184), its worst finish in a month. SoftBank Group, the holding company whose investments largely consist of internet and telecommunications interests, tumbled 3.3 per cent to 9,485 yen.

“Today’s turmoil in the region’s tech stocks was sparked by the sell-off in their peers on Wall Street last night,” said Linus Yip, the chief strategist for First Shanghai Securities. “The year-to-date surge in the sector has been a bit too fast and too much. A consolidation is reasonable.”

Tencent is first Asian company to top US$500 billion in value, joining Apple and Facebook

Another trigger might be fund rotation towards the end of the year, Yip said, with many investors wanting to cash in profits after a steep rise in the sector.

The Hang Seng Composite Information Technology Index, which tracks stocks in the information technology hardware sector, has soared by 90 per cent this year, almost three times the year-to-date gains on the Hang Seng Index.

On Wednesday, the Nasdaq Composite lost 1.3 per cent, its biggest one-day drop in more than three months, as investors switched from technology shares to other sectors that were expected to benefit more from plans to cut taxes and reduce regulations in the US.

Facebook, Apple, Netflix and Google parent Alphabet were among the biggest decliners along with Alibaba Group Holding, which owns the South China Morning Post. Alibaba Group shares fell by as much as 7 per cent before closing the day at US$179.91, down 3.6 per cent.

Yip, however, does not think the party is over for tech.

He said technology stocks, in the long term, have a major lead in the global market, as the internet is reshaping the economy and changing the way people do business.

Among other technology movers in Hong Kong was AAC Technologies, an acoustic component supplier for Apple’s iPhone and other computer products, which fell by 6.2 per cent to HK$156.3. Another Apple supplier, Sunny Optical Technology, also fell by 6.1 per cent to HK$130. Chinese software developer Kingsoft was down by 3.9 per cent to HK$22.2.

In Taiwan, Hon Hai Precision Industry – better known as Foxconn – dropped 2.9 per cent to NT$100. In Tokyo, electronic component maker Murata Manufacturing lost 2.2 per cent to 15,165 yen and Fujitsu shed 0.9 per cent to 835 yen.

On the Shenzhen Stock Exchange, components maker Accelink Technologies dropped 4.1 per cent to 29.51 yuan (US$4.6), chip maker Unigroup Guoxin lost 2.2 per cent to 47.93 yuan and voice-recognition software company iFlyTek settled 1.8 per cent lower at 65.86 yuan.