Written at a time when Tencent’s share price hit a new low in nearly four years

Today’s intraday Tencent stock price fell 2% again, and the stock price almost hit a new low in nearly 4 years. Compared with the previous drop below 300 Hong Kong dollars and countless people calling for bargain hunters, this time it was obviously much quieter and the atmosphere was gone. After all, Hong Kong stocks were in a hurry in the first half of the year. The drop ended with Tencent falling below HK$300. What will happen this time?

This article is only a record of personal investment thinking and does not constitute any investment advice. The pattern and position are different, and it is for reference only.

Just over a year ago, against the backdrop of the global bull market, domestic funds raised their arms and chanted across the Hong Kong to compete for pricing power. Tencent’s 10% increase in consecutive days rose, and its stock price was close to HK$750 at one time. , I’m not bragging about it here, I also bought a turbo for 800 Hong Kong dollars at the time, and I thought it was nothing to exceed 1,000. In the next few days, it began to reverse the form and started an infinite decline, which has continued to this day. As can be seen from the monthly line, there has been no particularly violent rebound along the way.

At present, there are several reasons for the decline of Tencent’s share price. The most important one is actually the reduction of major shareholders. Although the liquidity of Hong Kong stocks is very poor, with Tencent’s reputation, there are still a lot of funds that are constantly buying the bottom, but once someone starts to stabilize Continued reduction of holdings will easily affect the stock price. Before the major shareholders reduce their holdings, the stock price is actually in a weak balance. Tencent is currently repurchasing stably every day, and the repurchase amount accounts for about 10% of the transaction amount on that day. At present, it is impossible to see the details of the daily reduction of major shareholders, because a reduction announcement will be issued for every 1% of the shares that are reduced. The next announcement is when the shareholding is reduced to less than 27%, that is, it is reducing its holdings of 9600w shares. Today, Tencent traded 1600w shares. I have not found the rules for the reduction of Hong Kong stocks. Assuming that the 200w shares are reduced every day, it will take about 45%. In the last trading day, the major shareholder transferred 190 million shares last time, and it will take about 100 trading days to reduce all the holdings.

And this is from an arithmetic point of view. From a rational point of view, major shareholders definitely want to sell at a good price, and it is impossible to sell without thinking. Therefore, the stock price has fallen a lot, and the selling speed will be slower. There is a high probability that all of these shares will be sold, which basically means that Tencent’s stock price will basically be under very great pressure in the next six months. If you don’t know what pressure is, the trend in the last month is pressure.

The selling amount of major shareholders is likely to be higher than the amount that Tencent repurchases every day, so you can ignore the value of this repurchase behavior and pay more attention to when the reduction will end. Although I’m not a Tencent shareholder, but seeing Tencent’s reduction and repurchase of major shareholders without thinking, I really don’t understand whether this is to protect the rights and interests of major shareholders or hurt the rights and interests of small retail investors. No matter how high the company’s value is, can it be possible? Wait until the major shareholder has sold out before buying. Why do you want to send money to the major shareholder? Maybe because of the company’s repurchase amount limit, it needs to continue to repurchase to reach the target price, but I don’t think it’s necessary, or maybe it’s my pattern too small.

However, as a small retail investor or outsider, if you want to increase your positions, I think there will be better opportunities in the future. The current Tencent decline, the decline caused by liquidity pressure is far greater than the fundamentals. Tencent’s fundamentals are not too big at present. There is no new policy pressure, and the biggest event may be the reduction of other Chinese concept stocks held in the future.

As a very good Internet company, Tencent already has a very mature business model. Tencent’s value has been memorized by most people, and the method of calculating Tencent’s value has also been clearly understood by various funds, but the stock price has remained constant. In fact, the capital is expressing its true thoughts, and the major shareholders have cast the most important vote.

Companies that are industry leaders cannot enjoy valuation premiums and are suppressed by liquidity problems. With the development of the industry and the consolidation of anti-monopoly, Tencent’s profitability will not necessarily change much, but the valuation may further decline, the growth is no longer, and there is no obvious momentum for overseas expansion. This is the largest holding of Tencent in the future. Risk, I do not deny the excellence of Tencent, but you have not considered what kind of money Tencent will make in the future, dividends or pe growth. Either way, you have to think carefully before buying.

Earnings growth will slow down, valuations will continue to fall, and stocks will continue to decline. When the liquidity problem (the reduction of major shareholders and the liquidity problem of Hong Kong stocks) is alleviated, we will consider the fundamentals, but the fundamentals are difficult to say, how to break the deadlock and obtain greater growth, this is a problem, no People like a giant who lies and wins (you know why).

At present, the entire Hong Kong stock market is still continuing to decline. Today, it has been approaching the low point of the first half of the year. If the interest rate hike tonight is more bearish, it may directly drop below 18,000 points at the opening tomorrow. The bottom of this wave of Hong Kong stocks will be at 15,000 points. Around -16000, until today, the decline is still a slow decline, there is no accelerated decline, and I don’t think it is the emergence of a bottom. As for the trend of Hong Kong stocks, I think high altitude can still be considered for every rebound. The South 2x bearish on the Hang Seng Index (07500.HK) and the South 2x bearish on the Hang Seng Technology (07552.HK) are still very good targets. A bunch of people diss, this time they continue to be bearish, because the last plunge actually had a lot of negative policy, this time is the liquidity pressure caused by the global interest rate hike, and it is difficult to relieve the pressure until the liquidity is resolved. If the Fed is dove tonight, it is estimated that there will be a good time for a while, but all kinds of complex global problems are still at hand, and winter is coming.

$FI Ernan Hang Seng Index (07500)$ $ Tencent Holdings (00700)$ $ Hang Seng Index (HKHSI)$

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