On January 10th, the news of Tencent Holdings significantly reducing its stakes in Weimob Group (02013.HK) and UBTECH (09880.HK) triggered a strong market reaction, causing Weimob Group's stock price to plummet by 26.10%, while UBTECH's price saw a slight decrease. Other Tencent-concept stocks like Youzan (08083.HK), China Creative Digital Entertainment (00136.HK), and New Oriental Education (01797.HK) dropped by 10%, 7.38%, and respectively. Concerns over a potential change in Tencent's investment strategy have put pressure on Tencent-concept stocks across the board.
Weimob Group Experiences Major Stake Reduction, Stock Price Tumbles
According to disclosures from the Hong Kong Stock Exchange, Tencent Holdings' stake in Weimob Group fell from 8.39% to 2.94%. This marks the first time in recent years that Tencent has reduced its stake in Weimob Group so significantly. In response, representatives from Weimob Group stated that Tencent's decision was primarily based on its own investment considerations, not against the company, and will not impact the company's business.
Weimob Group has a deep investment relationship with Tencent:
- 2019: Tencent, via Tencent Mobility Limited, invested in Weimob, achieving a 2.92% stake. After listing, Tencent became Weimob's second-largest shareholder through multiple stake increases, with its maximum holding reaching 7.73%.
- 2021 and 2024: Tencent participated in several new share issuances and financing activities of Weimob, further strengthening its capital cooperation with Weimob.
However, after this reduction, Tencent's stake in Weimob Group has sharply fallen to less than 3%, leading to concerns about its future support.
UBTECH Also Faces Stake Reduction
Aside from Weimob Group, Tencent also reduced its holdings in UBTECH. Tencent's stake in UBTECH dropped from 8.05% to 2.08%. Although UBTECH's stock price didn't fall significantly today, market confidence in its future performance has been somewhat affected.
Speculation on Tencent's Investment Strategy Adjustment
By reducing its stakes in Weimob Group and UBTECH, Tencent realized HKD 1.67 billion, sparking speculation that it might be adjusting its investment strategy. Analysts believe Tencent may be looking to cash out from non-core assets to optimize its portfolio in response to the current complex market environment.
The market anticipates that Tencent might further reduce its stakes in other investment companies, and this uncertainty is putting pressure on the overall performance of Tencent-concept stocks. Investors worry that if the reduction extends to other holdings, it will further undermine market confidence in Tencent-concept stocks.
Market Reaction and Future Outlook
Following Tencent's sell-off news, Tencent-concept stocks have generally pulled back. Investors need to closely monitor changes in Tencent's investment strategy and developments related to other holdings.
Industry experts advise that in the current environment, investors should carefully manage the risk of volatility in Tencent-concept stocks and observe whether Tencent will shift its investment focus in the future. This will have significant implications for the medium- to long-term development of the Hong Kong market and Tencent-related enterprises.
