Tencent throws $ 65 billion in 2-day slip as investors fear Chinese government crackdown

Tencent shares fell 3.5% in Hong Kong on Monday, which means the value of the company has fallen by more than $ 65 billion in two days amid fears that Chinese authorities will step up control of the giant of technology.

Chinese regulators fined the versatile tech company $ 77,000 on Friday, and also penalized other big names like Baidu and ByteDance, for failing to seek approval of the deals. Authorities could also force the company to restructure, according to a Bloomberg report.

For some investors, the heightened surveillance has disturbing echoes of the government’s crackdown on Jack Ma’s Ant Group, which has seen its $ 37 billion IPO suspended and facing major restructuring.

Tencent shares slipped about 8% in Hong Kong on Friday and Monday, to 628 Hong Kong dollars ($ 80.89).

Its market capitalization fell to $ 776 billion on Monday, down more than $ 65 billion from $ 841 billion on Thursday, according to Bloomberg data.

The stock is now a far cry from an all-time high of over HK $ 760 reached earlier in 2021, in part thanks to a wider sell-off in global tech stocks that was boosted by higher bond yields.

Tencent is a conglomerate offering services such as games, social media, music, e-commerce, and payments.

Its CEO Pony Ma is worth $ 64.4 billion, making him the 15th richest person in the world and the second richest in China, according to the Bloomberg Billionaires Index.

Regulators are likely to force Tencent to create a financial holding company that includes its banking, insurance and payments services, according to Bloomberg, which cited people with knowledge of the situation.

Many of the largest companies in China’s fast-growing fintech industry face increased scrutiny from the government.

The banking authority said the new rules are aimed at preventing monopolies and ensuring market stability.

Hong Kong and Chinese stocks have fallen in recent weeks as higher bond yields made fast-growing tech stocks less attractive – but also amid fears of government crackdown.

Hong Kong’s Hang Seng Index edged up 0.33% on Monday, but the stock market’s technology index fell 2.3%.