Buy-back snaps Tencent's four-day losing streak

Tencent stemmed the slide in its stock with a HK$75.7 million buy-back that helped it to rise 1.6 per cent yesterday, after falling for four straight trading days.

The stock closed at HK$509.50, recovering HK$8 from Monday's close. It has lost more than 20 per cent of its value in a month since hitting a HK$635 peak on March 6.

The Shenzhen-based company that operates WeChat, the country's most widely used instant messaging application for smartphones, bought 153,000 shares at an average of HK$501.55 in the open market on Monday, it said in an exchange filing yesterday.

"Investors should wait for more corrections instead of rushing to buy," said Daniel So, a strategist at CMB International Securities. "I think the share price of Tencent will continue to fall to about HK$480, at best, as it was at the end of January."

So said yesterday's rally was spurred by news of the buy-back but that was hardly the best option for Tencent because, while the price tag might not be high, it was not cheap, either. "In the short term, Tencent could dip to HK$450," he said.

The correction has been triggered by a number of factors, according to So. The valuation of Tencent was too high, he said, adding that it was also caused by the correction of technology stocks in the US market.