Should you trade Tencent shares?

• Tencent Holdings Ltd (HKG: 0700) share price closed at HK$323.60 on Tuesday (30 August 2022)
• The tech group’s shares rallied last week after the Chinese government introduced new economic measures
• Tencent has also bought back a record amount of shares in 2022
• Keen to trade Tencent shares? Open an account with us to start today.

Tencent stock price: what’s the latest forecast?

Tencent shares rallied as much as 7% recently, after the Chinese government announced a one trillion yuan (around US$146 billion) stimulus package to help spur the economy.

The State Council, China’s cabinet, spelled out 19 key measures during a meeting last Wednesday (24 August 2022), including the allowance of a further 300 billion yuan that state policy banks will be given to invest in infrastructure projects.

Looking ahead, IG analyst Yeap Jun Rong said that the Chinese stock market’s latest uptick will require a ‘more sustained recovery in economic conditions’ in order for there to be ‘longer lasting market confidence’.

‘While further policy support from China authorities to stabilise its economic growth may be welcomed, market reaction to the announcement was reserved, which may suggest that some caution around the effectiveness of its policy support persists,’ said Yeap.

The e-commerce giant’s share price remains down by around 29% year-to-date, with the Chinese economy continuing to show signs of sluggishness.

DBS analysts rated Tencent shares a ‘buy’ alongside a price target of HK$432 on 18 August 2022. The price target equates to a 33.5% upside potential.

Tencent updates: what else is new?

The group has also been repurchasing shares in record amounts in 2022. As of 25 August 2022, Tencent has bought back HK$11.4 billion worth of shares, compared to HK$2.6 billion across the whole of 2021.

Still, analysts see the buy back as ‘not huge’, and instead a ‘positive’ sign that the management still sees opportunities in reinvesting into its own business.

Last Friday (26 August 2022), the US Securities and Exchange Commission (SEC) also struck an agreement with China Securities Regulatory Commission (CSRC) and the Ministry of Finance regarding inspections and investigations of audit firms based in China and Hong Kong.

The SEC had previously been talking about delisting foreign companies, such as Tencent, whose audit paperwork could not be inspected.

‘This agreement marks the first time we have received such detailed and specific commitments from China that they would allow Public Company Accounting Oversight Board (PCAOB) inspections and investigations meeting US standards,’ the SEC said, adding that it ‘will be meaningful only if the PCAOB actually can inspect and investigate completely audit firms in China’.

Earlier, the company saw its revenue slip 3% year-on-year (YoY) to 134 billion yuan (US$19.7 billion) in the second quarter of 2022. Analysts surveyed by FactSet had expected Tencent to report a revenue of $19.9 billion.

This was Tencent's first revenue drop from on a YoY basis since going public in 2004.

Thinking of trading Tencent shares?

Go long or short via CFDs on Tencent and other Hong Kong shares with our award-winning platform.* Open an account with us to start trading shares immediately.

_{*Awarded the Best Online Trading Platform by Influential Brands in 2021.}