Tencent Holdings Ltd (騰訊) is turning into a serious drag for emerging-market investors.
The stock has tumbled 18 percent since June, its worst performance relative to an index of global technology companies since it started trading in 2004.
The biggest stock in Asia extended its decline yesterday, even as the MSCI World Information Technology Index headed for its seventh consecutive quarterly gain.
Tencent’s fall from grace has turned it into the world’s most disappointing stock trade this year, contributing to almost half of the Hang Seng Index’s decline in the third quarter.
Because of Tencent’s size and rally last year, it features in more than half of all emerging-market equity portfolios, and those who own it have an average 5.2 percent exposure, according to eVestment data as of June.
That makes Tencent their largest position, the data showed.
The Chinese company’s shares were weighed down by its first profit drop in at least a decade, revoked licenses and a significant regulatory wall in the country.
One potential beneficiary of outflows from Tencent is Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which has the second-largest weighting on MSCI’s Emerging Markets Index. The chipmaker surged 21 percent in its best quarter since 2003.
Meanwhile, Hong Kong’s new stocks are not finding much love.
This week’s shocker debut was China Renaissance Holdings Ltd (華興資本控股), down almost 30 percent in its first two days.
Meituan Dianping (美團點評), which started trading last week, is on track to drop for five straight sessions.
About 80 percent of Hong Kong’s US$100 million-plus listings this year are trading below their initial public offering prices.
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