Who is killing Tencent? Plummeting share price alarms investors

EDINBURGH — Naspers is an important stock in South Africa. Because of its market capitalisation, it represents a sizeable chunk of the main market indices. Underpinning Naspers, meanwhile, is the Chinese tech giant Tencent. This is because Naspers bought Tencent in 2001 when it was a small, glittering start-up and has benefited from the tech company's mushrooming success. But, Tencent is maturing as is the internet sector. Tencent is fighting fierce competition in the Chinese market. What's more, government regulations are impacting on the business, says The Economist in response to a Chinese business news site article that asks: "Who is killing Tencent?". – Jackie Cameron.

By Thulasizwe Sithole

The stock price of Chinese tech giant Tencent has plummeted, causing alarm. The Economist examines the change of fortune for Tencent, which has fuelled Naspers for a considerable period.

"It would be no surprise if Tencent were feeling touchy as it approaches its 20th anniversary on November 11th. Its shares, traded in Hong Kong since 2004, have fallen by 28% in 2018 (see chart). This time last year it was the first Asian company to be worth half-a-trillion dollars, hitting a record valuation in January of $573bn. It has since shed $218bn, roughly equivalent in value to losing Boeing or Intel. Other Chinese internet stocks have fared worse than Tencent, among them NetEase, a gaming rival, and jd.com, an e-commerce firm. But even so, the drop stands out," says the publication.

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