Two hip, young start-ups are set to become the latest challenge to Tencent just as China’s dominant social media company struggles with shrinking margins and slowing growth.
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Is it time to catch the global stock market’s biggest falling knife? For watchers of Tencent Holdings, whose largest shareholder is South Africa’s Naspers, it’s an increasingly pressing question.
Even for the world’s worst performing stock markets, Thursday’s losses were extreme. China’s benchmark equity gauge closed 5.2% lower, the biggest loss since February 2016, as a global selloff spread.
Naspers, whose share price has fallen in tandem with affiliate Tencent, in which it holds a 31.2% stake, offers “significant value at these levels”, Ashburton Investments said on Wednesday.
More bad news for Tencent: the Chinese Internet giant has lost its spot as one of the world’s 10 biggest companies.
Not only has the Chinese Internet giant lost more market value than any other company worldwide this year, its 38% drop from a closing high in January is now the deepest since Tencent’s 2004 listing in Hong Kong.
While Tencent is cutting the number of business groups to six from seven, the company is actually adding to its structure.
What was the world’s worst technology stock only months ago has become China’s hottest, staging a defiant comeback since it was booted off Hong Kong’s benchmark gauge.
Of the 10 companies worth more than $100-billion that analysts predominantly rate as buy, Tencent – 31.2% owned by South African-listed Naspers – has by some distance had the worst 2018.