China’s unprecedented crackdown on its technology industry has turned Tencent Holdings Ltd. from a market darling into the world’s biggest stock loser this month. The Chinese Internet giant had tumbled 23% in July as of Wednesday, set for its worst month ever after erasing about $170 billion of market value. 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. 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. 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. Tencent trading below HK$500 is attractive, but the upcoming earnings will be a key thing to watch,” said Pong, adding that if the firm can achieve 20%-30% growth, its shares could enjoy a solid rebound. “Because that would show they can still maintain good profitability in this tough environment.”To Citigroup analysts including Alicia Yap, any substantial share buyback by the company could also help reverse currently poor investor mood. “We believe if major Internet companies announce new share buyback programs or increase size of existing buybacks, it would demonstrate the management’s confidence in fundamentals and reassure investors on profit growth outlook,” Yap and her colleagues wrote in a research note. Yap has a ‘buy’ rating on the stock.