Tencent Holdings has lost US$48bn (R566bn) of market value over two days, pummelled by a warning on margin pressure as well as a surprise sale of stock by its biggest shareholder.
Asia’s largest company slumped 4.4% in Hong Kong Friday, slicing $22bn from its market value. The drop came after Naspers revealed it raised HK$76.9 billion ($9.8bn) selling a 2% stake at a 7.8% discount to Thursday’s close. The South African media company is cashing in a sliver of one of the greatest venture capital investments ever — a deal so large it ranks among the largest Hong Kong share sales of all time.
That deal emerged less than a day after Tencent signalled its willingness to sacrifice short-term margins by spending on content and technology to galvanise future growth. Investors also sold off Chinese stocks as a trade dispute with the US escalated.
“This is more to improve Naspers’s own free cash flow and allow them higher flexibility in pursuing investment opportunities,” Jefferies analysts led by Karen Chan wrote Friday. “This has no negative implication for Tencent’s growth potential.”
Naspers will use the money from the sale of Tencent shares to invest in its classifieds, online food delivery and fintech businesses and make other investments. A representative for Naspers couldn’t be reached for further comment.
Despite the sell-off, Tencent remains China’s largest company and one of the world’s most valuable. Trading volume surged to about $16bn on Friday as bearish bets on the company soared. — Reported by Crystal Tse and Lulu Yilun Chen, with assistance from Loni Prinsloo
