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Tencent share price plummets 10%, here’s what it means for ASX investors

What does the latest Tencent news mean for ASX investors?
The post Tencent share price plummets 10%, here’s what it means for ASX investors appeared first on The Motley Fool Australia. –

Shares in Chinese tech and gaming giant Tencent Holdings Ltd (HKG: 0700) suffered a volatile trading session yesterday. At one point, more than 10% of the company’s value had been erased during trade. The volatility and price weakness are flowing onto ASX investors through the Betashares Asia Technology Tigers ETF (ASX: ASIA).

So, what is causing these downward movements to one of the biggest companies in the world… let’s take a look.

Gaming dubbed ‘spiritual opium’

It was a rollercoaster trading session on the Hong Kong exchange for Tencent investors yesterday. Shares quickly fell by 10.8% before recovering to a 6.1% drop by the end of trading.

Concerns around tighter gaming regulations appear to be behind the erratic behaviour. This followed a scathing report released by the Chinese state media, referring to games as “spiritual opium”. The story mentioned reports of children playing Tencent’s Honor of Kings for eight hours a day.

Following the news, Tencent announced increased limits on playtime for minors. Additionally, the company plans to block children under the age of 12 from making in-game purchases.

Furthermore, Tencent suggested the possibility of banning games completely for kids under 12 years old. The shocking move clearly blindsided investors – prompting some shareholders to sell now and ask questions later.

Impact on ASX investors

The continued selloff in the Tencent share price puts further pressure on ASX investors of the Betashares Asia ETF. According to the fact sheet, Tencent makes up 9.7% of the exchange-traded fund, making it the fourth-largest holding.

However, Tencent is not the only company weighing on the fund. Rather, this is just the latest development in China’s crackdown on industries that are considered to be creating ‘social discontent’.

The uncertainty has led to downward pressure on the ASIA ETF over the past six months. As a result, ASX investors of the ETF are down 23% during the period.

The post Tencent share price plummets 10%, here’s what it means for ASX investors appeared first on The Motley Fool Australia.

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More reading

2 excellent ETFs for ASX investors in August

Here’s why the BetaShares Asia ETF (ASX:ASIA) share price is down 10% over a month
2 ASX tech shares that might be buys in August 2021

How China’s war on tech companies can hit ASX shares where it hurts

What’s gone wrong with China shares like Tencent lately?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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