By Jeanny Yu for Bloomberg, Fin24
China’s biggest online platform Tencent’s accelerating sell-off could get a lot worse if the stock fails to hold above its key support level.
There’s a risk that will happen Thursday: Asia’s biggest stock was down 0.6% in Hong Kong as of 1:03 p.m. local time, despite an otherwise upbeat stock market.
Tencent is now trading below the key level of HK$320 that supported its shares on three occasions this year. The stock has lost about 20% since a peak in April, equivalent to some $93 billion in market value.
Naspers, which via its new digital company Prosus owns a 31% stake in Tencent, is also feeling the pain. Both shares fell by more than 5% yesterday, losing R145 billion of their combined market value in a single day.
While the Tencent shares have been stuck in a downtrend for months, selling was particularly aggressive Wednesday despite no apparent trigger.
Theories circulating round some trading floors included souring sentiment from investors in China, as well as concern that Tencent’s decision to air National Basketball Association games may backfire.
Adding to jitters this week was a local media report that China is considering revising a law to control young people’s online gaming activities – a business that remains one of Tencent’s most profitable.
The Internet giant will report third quarter earnings on November 13.
Prosus, which is currently trading at around R1,020, has now lost almost 18% of its value since its listing in Amsterdam and on the JSE mid-September.