vested
Tencent games come under eye of regulatorsby Tracy Hu
A total of 11 games developed by internet giant Tencent Holdings (0700) are reportedly under investigation by Chinese regulators, while a shareholder earlier sold HK$50 million worth of Tencent shares.
According to a report by People's Daily, some 50 games are involved in this investigation. King of Glory, which is the most popular online mobile game under Tencent, was not included.
Shares of Tencent Holdings closed 1.44 percent lower at HK$397.20 yesterday.
Bank of America Merrill Lynch's April fund manager survey released yesterday found the world's biggest tech stocks were investors' top pick for the third straight month despite mounting worries over regulation.
"Long FAANG + BAT" remains the most crowded trade, the bank's strategists said, referring to US tech giants Facebook, Apple, Amazon, Netflix and Google, and China's Baidu, Alibaba and Tencent.
Sustained enthusiasm for tech stocks came against a backdrop of increasing anxiety about stock markets' resilience.
Brock Silvers, managing director at Kaiyuan Capital, said: "Tencent commands such a high valuation because it's a great company. But the investment required to sustain Tencent's growth trajectory is increasing, and the gaming business, one of the company's earnings pillars, reportedly faces
serious regulatory investigation and many analysts also believe that China's economic cycle has peaked."
He added that a 1.44 percent drop in share price is worth following, but value investors may want to keep their powder dry and await a better entry point.
Stevan Tam, director of the research department at Fulbright Financial Group, said it is not a good time to buy Tencent shares as he estimates a
bottom price of HK$385 in the short term.
In terms of sectors, Tam is optimistic about shares of pharma companies
Source: The Standard
http://www.thestandard.com.hk/section-n ... 0418&sid=2
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