Tuesday, November 30

The repressive crusade of the Chinese Communist Party chooses Tencent as a new victim

Tencent is one of the largest values ​​of the Hong Kong Hang Seng Index, and one of the largest companies in the world in market capitalization, but not even the Chinese tech giant escapes the scrutiny of Xi Jinping and his Communist Party.

The multinational responsible for Wechat received orders on Tuesday to halt the launch of new apps and updates, waiting for Chinese industry regulators to review whether Tencent complies with new privacy laws implemented by the Asian government this month.

The multinational company claimed to be working with the institutions to ensure compliance with the strict laws imposed by the government of Xi Jinping. The news, however, is yet another sign of China’s close surveillance of its big tech companies.

In recent months, Chinese regulators have imposed € 2.5 billion in sanctions on the e-commerce giant Alibaba for abusing its market position; paralyzed the IPO of Ant Group, a subsidiary of Alibaba, and fined companies such as Uber chino, Didi, and own Tencent, for “not adequately informing the authorities.”

Calm before a new setback of the Government

Despite the uncertainty generated in the markets by the repressive crusade of the Chinese Communist Party, which caused the industry to contract for the first time since the pandemic broke out, analysts see the Asian titan’s market as a field of opportunity.

Blackrock, for example, showed his optimism with China noting that the country begins to offer attractive valuations, and predicting that government intervention in the future of markets and listed companies will relax next year, so that growth stocks will be the best option to benefit from the change.

The fund manager has readjusted its positions on the Asian continent and China he got the best of it because of the good prospects. Their view of the country’s equities has gone from “underweight” to “neutral”.

From Bloomberg Intelligencemeanwhile, they indicate that the intensity of antitrust investigations in China can lead to increased activity in mergers and acquisitions within the country,

“Internet companies in China they can go on to form local consortia to carry out mergers and acquisitions, and reduce the risk of violating antitrust rules, as they increase in 2022, “says the Bloomberg report.

Tencent It lost 1.41 percent in Hong Kong trading during Tuesday’s session, down to Hong Kong dollars (54 euros) a share. However, the consensus of analysts places its price at 610 Hong Kong dollars (69.8 euros).

The new laws impacted their results

JP Morgan sets a price target of $ 618, and in its report on November 22, refers to Tencent’s monetization capacity in its software, video, and video game services as a clear indicator of its potential growth.

The financial entity also states that “investor sentiment in regulatory risk should relax, due to the comments of the directive that this risk is low in the gaming sector, and the fact that the impact of the new laws to protect ad revenue is not significant. “

In the report, therefore, JP Morgan considers that the actions of Tencent They will offer a good 12-month return once the billing is positive, which they estimate to occur during the first quarter of 2022.

The technology group had a turnover of 19.6 billion euros during the third quarter of 2021, a result that beat analysts’ estimates but which represented the lowest growth in its turnover since 2004, hampered precisely by Chinese government regulations.

Ma Huateng, CEO de TencentHe then assured that “the industry was adapting to the new regulation and macroeconomic development”, but that he was confident that the new legislative framework “should contribute to a more sustainable development path for the industry.” For now, the scrutiny of the Chinese government has once again played a trick on them.


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