Tencent slumps most in seven weeks on Prosus selling speculation

TENCENT Holdings tumbled by the most in seven weeks amid speculation its largest shareholder Prosus may speed up selling shares in the Chinese Internet giant.

Prosus plans to deposit an additional 96 million shares into the Hong Kong stock clearing system. The move may signal a quicker selling pace and put pressure on the stock, even though Tencent has been repurchasing shares, according to traders. Tencent fell as much as 4.9 per cent to HK$358 on Wednesday (Apr 12), the most since Feb 21. 

“It’s likely that Prosus will speed up their selling of Tencent shares when it’s near the level of HK$400,” said Steven Leung, UOB Kay Hian executive director. “Tencent has been buying back their shares to offset the market impact of big holders selling every day, but still, such negative news would always cause some concern.” 

As of January this year, Prosus had sold more than 193 million Tencent shares for a net proceed of US$7.2 billion, cutting its stake to about 26.9 per cent from 29 per cent in June 2022 when it first announced the sell-off plan.

Tencent has bought back a combined 8.3 million shares, snapping up almost every trading day since Mar 27, after suspending the operation for more than two months, according to data compiled by Bloomberg. Its buybacks earlier didn’t manage to stem the stock declines when the market was concerned about a regulatory crackdown and Covid’s impact on the economy. 

Shares of Tencent have rebounded 90 per cent from their October low. The company’s plan to develop a ChatGPT-like bot and Beijing’s resumption of game approval have boosted its fortunes. 

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“Tencent’s share price always takes a hit when there’s news of Prosus selling,” said Ling Vey-Sern, managing director at Union Bancaire Privee. “But the sale doesn’t affect the fundamentals of Tencent.” BLOOMBERG