Global Courant 2023-04-12 20:18:32
Image credit: South China Morning Post
Tencent Holdings, the Chinese internet giant, has experienced a significant drop in its share price as its largest shareholder, Prosus, plans to deposit an additional 96 million shares into Hong Kong’s stock settlement system, fueling speculation that Prosus could slow its sales pace. accelerate. Although Tencent has bought back its shares, this move by Prosus could put pressure on the shares. Traders are predicting that Prosus will likely accelerate sales of Tencent shares when they reach HK$400, a price not far off. The news caused some concern and Tencent’s share fell as much as 4.9% to HK$358 on Wednesday, its biggest drop since Feb. 21.
According to Steven Leung, executive director of UOB Kay Hian, Tencent bought back its shares to offset the market impact of big holders selling every day, but negative news like this is always worrying. By January 2023, Prosus had sold more than 193 million Tencent shares, with net proceeds of $7.2 billion, reducing its stake to approximately 26.9% from 29% in June 2022 when it first launched the sell-out plan announced. Tencent has repurchased a total of 8.3 million shares almost every trading day since March 27, after suspending operations for more than two months. However, the earlier buybacks failed to halt stock declines as the market worried about a regulatory crackdown and the impact of Covid on the economy.
Despite the negative news, Tencent’s shares are up 90% from their October lows, thanks to the company’s plan to develop a ChatGPT-like bot and Beijing’s resumption of game approvals, which boosted its fortunes . The sale of Tencent shares by Prosus will not affect Tencent’s fundamentals, said Vey-Sern Ling, general manager of Union Bancaire Privee.
In conclusion, Tencent’s share price has taken a hit from the news of the sale of Prosus shares, leading to speculation that the pace of sales could accelerate. Although Tencent has bought back its shares, this negative news is always a cause for concern. However, Tencent shares have recovered 90% from their October lows, and Prosus’s sale of Tencent shares has not affected the company’s fundamentals.