Tencent briefly hits HK$500 before profit taking; Hong Kong stocks fall on coronavirus worries

Hong Kong stock traders turned cautious on coronavirus concerns, leaving the Hang Seng Index with a loss and index heavyweight Tencent below its all-time high hit Tuesday.

Tencent, China’s social media and online games giant, rose as much as 1.5 per cent to reach HK$505.00. But the new milestone -- sailing past HK$500 -- turned out to be too slippery, and the stock found itself falling 1.3 per cent to close at HK$490.80. On Tuesday, it closed at HK$497.40, putting its market capitalisation for the session above that of Alibaba, the e-commerce giant and owner of the South China Morning Post.

“Tencent’s gaming business in the first quarter was very strong, and up to May the revenues of its flagship games Honor of Kings and PUBG Mobile were extraordinary. The market thinks there is strong momentum,” said Stanley Chan, director of research at Emperor Securities.

Tencent will hold its digital games conference this Saturday, which is also boosting enthusiasm about the stock, he said.

“The Covid-19 situation is still fluctuating, so people will continue to spend more time playing mobile games. This will help the valuation of Tencent’s share price. New economy stocks are the trend right now, and the Nasdaq has also reached a new high. A lot of liquidity is flowing into Tencent right now.”

Tencent is a favourite among analysts tracked by Bloomberg, with 52 rating it a buy, four a hold and zero a sell, with a consensus target price of HK$512.93. However, analyst Alex Yao of J.P. Morgan gives it the most bullish outlook, expecting shares to rise to HK$600 in the next 12 months.