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Caixin

Tencent president cashes in $131m of shares as price surges

Martin Lau Chi-ping taps into stock's 45% jump this year on gaming expectations

JPMorgan Chase & Co. said Tencent is entering its strongest growth in the game business since 2008.   © Reuters

Martin Lau Chi-ping, president of Tencent Holdings, cashed in on the social media and game giant's surging stock price this year to the tune of HK$920 million ($131 million) by selling off shares.

Lau unloaded 500,000 Tencent shares for HK$254 million last week, reducing his holding in the company to 0.57%, according to Tencent's latest disclosure to the Hong Kong stock exchange. It was the fourth time this year that Lau sold Tencent shares.

Tencent's stock climbed to a historic high in Hong Kong of HK$546.50 apiece Wednesday before closing at HK$543. The closing price was up 5.23% from the previous day and has gained nearly 45% this year. The company's market cap topped HK$5.19 trillion after surging 26% over the past month, replacing e-commerce giant Alibaba Group Holding Ltd. as the most valuable company traded in Hong Kong. 

The stock is benefiting from investor optimism on its game business as the COVID-19 pandemic forces people to spend more time at home. JPMorgan Chase & Co. said Tencent is entering its strongest growth in the game business since 2008. BNP Paribas said Tencent's game business will sustain strong growth for some time starting this year, bolstered by the release of the mobile version of its popular games including Dungeon Fighter Online and League of Legends.

Mainland investors pouring capital into Hong Kong through the Shenzhen and Shanghai stock connect programs are showing particular interest in Tencent, analysts said. Data from Wind Info showed that investors put HK$10.5 billion into Tencent shares over the 14 trading days through Wednesday. Investors' holdings in Tencent through the connect programs rose to 2.95%.

Before his sale last week, Lau dumped 1.7 million Tencent shares in three batches between January and June. Altogether, he sold 2.2 million shares for nearly HK$920 million this year. Separately, in March Lau bought 4.4 million Tencent shares, or 0.04% of the equity.

Tencent founder and Chairman Pony Ma sold about 14.7 million shares for HK$6.27 billion in the first half of the year, reducing his stake to 8.42%, company filings showed.

Tencent's archrival Alibaba, which debuted in Hong Kong in a secondary listing last year, has yet to be included in the stock connect programs, barring mainland investors from buying its shares. Goldman Sachs said in a recent research note that Alibaba is expected to be included in the program by August.

Tencent ranked as the top Chinese video game developer based on revenue from the Apple App Store and Google Play, according to a June ranking by mobile intelligence company Sensor Tower.

In the first quarter this year, Tencent booked stronger-than-expected revenue growth of 26% to 108 billion yuan ($15.4 billion), boosted by sales of games, digital content and online advertising, despite weakening finance, cloud and corporate services businesses affected by the pandemic. Tencent reported 6% year-on-year growth in net profit to 28.9 billion yuan.

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Caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Nikkei recently agreed with the company to exchange articles in English.

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