Tencent’s robust earnings belie looming regulatory challenges
- Regulatory scrutiny over gaming, fintech and antitrust issues clouds Tencent’s future, despite its stellar 2020 financial results
- Tencent plays down the impact of a potential restructuring of its fintech business
“Tencent has telegraphed its intentions to work proactively with regulators,” said Michael Norris, a research and strategy manager at Shanghai-based consultancy AgencyChina.
“Tencent’s communications to the market, especially surrounding the most sensitive parts of its business – such as gaming and microloans – have been clear and consistent. But it’s too early to say whether this approach will work in Tencent’s favour. The direction and trajectory of regulatory scrutiny has everyone looking a little flat-footed.”
Share price of the Shenzhen-based company slid 2.8 per cent to close at HK$606 in Hong Kong Thursday, marking an over 20 per cent decline from its peak two months earlier.
Tencent, which runs the world’s largest video games business by revenue and China’s biggest social media operation, published its latest financial results on Wednesday, highlighting its progress in addressing concerns such as teen addition to games while remaining vague on areas such as fintech.