The Insider

Tencent’s director cuts stake amid record close, as more Hong Kong companies disclose insider trades

PUBLISHED : Sunday, 21 January, 2018, 1:19pm
UPDATED : Sunday, 21 January, 2018, 9:16pm

Tencent Holdings’ independent non-executive director Bruce Iain Ferguson last week reduced his stake in China’s largest social network operator, selling 75,000 shares at HK$444.60 each, according to filings to the Hong Kong stock exchange.

Ferguson’s sale reduced his total stake in Tencent to 395,000 shares. He sold 20,000 shares in November at HK$430 each, 20,000 shares last July at HK$283.40, and 190,000 shares between October 2010 and August 2013 at an average of HK$50.59. The share price of Tencent, which operates the WeChat social network and publishes mobile games like Honour of Kings, rose to a record HK$452.40 last week.

Sales by Tencent’s insiders and executives typically presage price increases, as shown by the October 2017 transaction by founder and chairman Pony Ma Huateng at HK$350 per share. The stock has soared 29 per cent since Ma’s sale.

Ferguson was among the rising number of corporate insiders selling their stocks in the Hong Kong stock market, as the city’s benchmark index soared to a record close. As many as 26 companies disclosed 107 disposals worth HK$337 million (US$43 million). On the buying side, 51 companies divulged 237 purchases valued at HK$246 million, more than double the value of shares bought back in the previous week.

Cosmo Lady (China) Holdings, a designer and producer of undergarments, disclosed its first buy-back since the company’s June 2014 initial public offering, buying 4 million shares between January 16 and 18 at an average of HK$2.64 per share, below its IPO price. Chairman and chief executive Zheng Yaonan bought 2.54 million shares between December 8 and 19 at HK$2.81 each. That raised his holdings to 1.191 billion shares, or 55.53 per cent of issued capital. The stock closed at HK$2.64 on Friday.

Significant point:

  • The buy-backs, made on the back of the 23 per cent drop in the share price since October 2017, accounted for 42 per cent of the stock’s trading volume last week.

Suncity Group, a property developer, disclosed the first purchase by a company insider since January 2010. Executive director Lo Kai Bong purchased 2.3 million shares on January 15 at HK$0.46 each, raising his holdings to 175.633 million shares, or 2.92 per cent of the issued capital. The company’s shares closed at HK$0.47 on Friday.

Significant Points:

  • The recent purchase, Lo’s first trade since he joined the company in March 2017, was made on the back of a 46 per cent drop in share price since May last year.

At China Logistics Property Holdings, a delivery company, founder and chairman Li Shifa purchased 2 million shares on January 15 at HK$2.50 each, expanding his holdings to 787.6 million shares, or 26.96 per cent of the issued capital. The stock closed at HK$2.51 on Friday.

Significant Points:

  • Li’s purchase, the first by a director since the stock was listed in July 2016, was made on the back of a 55 per cent drop in share price since February 2017
  • Li’s purchase price was lower than the IPO price of HK$3.25

At IBO Technology, a network integration services provider, executive director Lai Tse Ming purchased 400,000 shares on January 16 at HK$1.59 each. The trade increased his holdings to 213.4 million shares, or 53.35 per cent of the issued capital. The stock closed at HK$1.64 on Friday.

Significant Points

  • Lai’s purchase, the first corporate shareholder trade (director, substantial shareholder or buy-back) since the stock was listed on December 28, 2017, was made on the back of the 26 per cent drop in share price from its debut price of HK$2.16
  • Despite the fall in the share price, the Director’s purchase price was above the IPO price of HK$1.50