Tencent's $146b rally surprises even bullish analysts

HONG KONG • Tencent Holdings' analysts, who have a history of being too bullish, have now been caught off guard by a rally that is gathering pace in Asia's biggest stock.

Its shares have jumped 27 per cent since an October low, adding US$108 billion (S$145.6 billion) to shareholder value.

The share price topped HK$405 on Monday for the first time since 2018, the price at which its biggest shareholder sold about US$10 billion worth of shares early that year. It was Hong Kong's biggest secondary offering at the time.

Tencent rose as much as 1.6 per cent yesterday to HK$413 before turning lower with the broader market. A series of block trades totalling almost one million shares crossed yesterday morning at around HK$402, suggesting some shareholders are making the most of the rally to take profit. The stock is trading near the most overbought level since late 2017.

Shares of the Chinese Internet giant are closing in on analysts' consensus target price, which has not happened in nearly two years. It is the most-loved stock in Hong Kong, as none of the 57 analyst ratings tracked by Bloomberg recommend selling it.

"The stock is rising partly due to a better earnings outlook," said analyst Kevin Tam at Core Pacific-Yamaichi International. "Its gaming product PUBG Mobile has done very well recently and there are some good signs for its new businesses."

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A version of this article appeared in the print edition of The Straits Times on January 15, 2020, with the headline 'Tencent's $146b rally surprises even bullish analysts'. Print Edition | Subscribe