It is really disturbing time for Chinese tech giants as the government started its unprecedented crackdown on its technology industry.
According to information, Chinese internet giant Tencent Holdings Ltd stock valueation tumbled 23% in July as of Wednesday and erased about $170 billion.
That marks the fastest evaporation of shareholder wealth worldwide during this period, Bloomberg data shows. Nine of the top 10 losers in shareholder value this month are Chinese companies, including Meituan and Alibaba Group Holding Ltd.
Tencent’s shares rebounded by 7.1% on Thursday morning, tracking broader gains in Chinese stocks after Beijing intensified efforts to alleviate concerns about its crackdown on the private education industry. T
The Shenzhen-based firm is one of the key casualties of an official campaign that targets some of the nation’s tech behemoths considered posing a potential threat to China’s data security and financial stability. Other companies which are bleeding include Alibaba, Meituan, Pinduoduo, Kweichow Moutai and Kuaishou Technology.
The selloff in its shares intensified earlier this week after Beijing broadened the regulatory clampdown to include other once high-flying industries such as private education.
The regulatory storm has resulted in penalties such as the loss of exclusive music streaming rights and anti-trust fines for Tencent. This week, the company said it was also suspending new user registration for its popular WeChat services and was ordered to fix mobile app-related issues.
Despite concerns about further punitive measures from regulators, the company’s stock is starting to look cheap and most analysts have refrained from cutting their price targets: Among the 68 analysts who have a rating on Tencent, 62 still recommend the stock as a “buy.” The average target price among analysts is HK$736.3, representing a 65% premium over Wednesday’s close of HK$447.2, Bloomberg data shows.
At HK$447.2, the stock was trading at 22.5 times forward earnings, well below its historical average of 30 times. It also has fallen to the most oversold level in more than six years.
(The story is based on Bloomberg inputs. It is published without prior permission)