Tencent Shares Hit 3-Week Low on Potential $7.6 Billion Stake Sale

By Ambar Warrick 

Investing.com-- Shares of Tencent fell more than 2% on Thursday after a report showed a stake worth roughly $7.6 billion in the Chinese internet giant may be due for sale. 

Tencent Holdings Ltd (HK:0700) shares fell 2.2% to HK$304.80 by 23:28 ET (03:28 GMT) and were trading around their lowest levels in three weeks. They were also among the biggest weights on the Hang Seng index, which fell 0.5%. 

Bloomberg reported that shares of the internet giant worth $7.6 billion had recently appeared in Hong Kong’s clearing and settlement system, which could point to a stake sale by a major holder. 

The most likely candidate for a sale appears to be Dutch conglomerate Prosus (AS:PRX), which has been steadily offloading its stake in Tencent to fund a share buyback. Prosus is a unit of South Africa’s Naspers Ltd (JO:NPNJn). 

Recently, a stake sale by U.S. hedge fund Berkshire Hathaway (NYSE:BRKa) Inc (NYSE:BRKb) in Chinese automaker BYD Co Ltd (HK:1211) was also telegraphed by data from Hong Kong’s clearing and settlement system. Shares had entered the system in late-June, before being formally sold in August. The move had also caused BYD shares to tumble. 

Tencent’s shares have weakened significantly this year, as rising U.S. Treasury yields dented appetite for technology stocks. Softer demand in Chinese markets, coupled with growing regulatory scrutiny have also dented shares of Tencent and its Chinese peers.

The firm reported its first-ever drop in revenue in the second quarter of 2022, amid pressure from government scrutiny and COVID-19 lockdowns. 

Shares of Tencent's peers Baidu Inc (HK:9888) and Alibaba Group Holding Ltd (HK:9988), which make up the BATs trio, rose more than 1% each on Thursday.