For a clue on how bearish foreign investors have become about Chinese stocks, take a look at Tencent Holdings, in which South Africa’s Naspers holds a roughly one-third stake.

The Shenzhen-based technology giant has tumbled 13% from its September record, wiping US$35bn — or about R481bn — off the value of its shares, as overseas funds pulled money from Hong Kong and Chinese equities.

The company’s large weighting on the Hang Seng Index — at 10% — helped make Hong Kong’s benchmark stock gauge one of the world’s worst performers last quarter.

The company, which has more buy ratings than any other in Hong Kong, is a victim of fund redemption pressures, according to Asset Management One Singapore. Investors pulled about $409m from exchange-traded funds that buy Chinese and Hong Kong stocks in the week to 21 December as concern grew over a weakening yuan and tighter liquidity.

“If there are fund redemptions, it’s hard to avoid selling Tencent because its weighting is so big,” said Toshihiko Takamoto, a Singapore-based portfolio manager at Asset Management One.

Tencent fell 0,4% at the midday break. The stock was the second-largest drag on the Hang Seng Index in the fourth quarter, after AIA Group. The Hang Seng Index tumbled 5,6% in the period as China’s currency plumbed lows not seen since 2008 against the dollar and concern about rising money market rates spurred a record meltdown in the nation’s sovereign debt.

Such has been the exodus that the top US ETF focusing on China suffered the biggest outflows among emerging markets, sending total assets to the lowest level in a decade.

US Federal Reserve officials last month increased their projections for interest rate increases this year, triggering a surge in the dollar and treasury yields. Higher US bond yields will cause outflows from emerging markets and Hong Kong, Australia & New Zealand Banking Group has warned.

The selloff hasn’t shaken analysts’ faith in the stock. Tencent has 43 buy ratings, two neutral recommendations and zero sells, according to analysts tracked by Bloomberg. The average 12-month target price implies a 26% advance over the next 12 months.

Analysts have their reasons to be optimistic. Tencent shares have rebounded after each selloff to make new highs during its 12-year listing, while the stock is the best performer on the Hang Seng Index in the past five years with a 500% gain.

The company reported a 43% jump in its third-quarter net income as its ability to attract Chinese gamers and social media helped fuel advertising growth. Profit is expected to continue growing for at least three more years, according to data compiled by Bloomberg.

There are signs investors are turning less bearish. The stock gained 5,6% last week, its first weekly advance since late October, and rebounding from a five-month low.