Tencent buys own stock for third trading day in unprecedented move

Source:Global Times Published: 2018/9/12 21:53:40

Chinese internet giant Tencent announced on Tuesday evening a buyback of HK$39 million ($4.97 million) worth of its own stock, the third buyback in three trading days, an unprecedented move for the firm whose shares have plunged in recent weeks.

The Shenzhen-based company has spent a total of HK$85.18 million on stock buybacks since Friday, the first time it bought its own stock since 2014.

"A stock buyback is a public statement that the company considers its own stock to be undervalued. Tencent will likely continue to do these small buybacks in the next few days," said Li Daxiao, chief economist at Shenzhen-based Yingda Securities.

Tencent's shares were among the world's best performers in 2017, when a 13-month winning streak led the stock to more than double from HK$179.7 in December 2016 to HK$471.2 in January 2018.

This year, however, the shares have tumbled about 35 percent, falling to $HK308.4 on Wednesday. Tencent shares are down 15.6 percent in the past two weeks alone in response to tightening regulation of China's videogame market.

"Investors are being too short-termist," Matthew Brennan, founder of Tencent-focused tech consultancy China Channel, told the Global Times on Wednesday.

 "Tencent's stock rose incredibly in 2017, then dropped rapidly in 2018, but its long-term strategy hasn't changed that much. Tencent is focusing in mini-programs, and all major internet companies in China are following that lead," said Brennan.

Posted in: ECONOMY

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