Tencent stock slides to fresh one-year low as investors’ sentiment takes a battering
Tencent has lost US$190 billion of its market value within eight months, more than the entire market cap of Netflix, and twice that of Goldman Sachs
Shares in internet giant Tencent Holdings slipped further on Thursday, sinking to their lowest level in a year as already weak investor sentiment was battered by a flurry of negative news.
Concerns included reports that the authorities may impose a lofty tax on online video games as part of a tightening of regulations in the gaming industry, while funds are flowing out of Hong Kong at a rapid pace amid a crisis engulfing emerging markets.
On top of that, analysts said investors’ nerves may have been frazzled by an abrupt plunge in the shares of JD.com, a major e-commerce ally in which Tencent holds the largest stake, after the arrest of its CEO on suspicion of rape. The possibility of charges being brought against Richard Liu Qiangdong after his arrest in the US last Friday - even though he was released - has caused reputational damage to both Liu and the company.
Tencent’s stock has fallen by a third since its peak on January 23, wiping out around HK$1.5 trillion (US$190 billion) of market value within eight months. That’s more than the entire market capitalisation of Netflix, and equivalent to two Goldman Sachs.
In the past month alone, Tencent has shed 15 per cent, after Chinese regulators all but stopped approving new online video games and proposed tighter oversight to address what they see as an epidemic of gaming addiction among the country’s youth. As China’s largest video games company, Tencent derives 41 per cent of its total revenue from the business.