Graphic: Mint
Graphic: Mint

Tencent wipeout topping $114 billion reveals depth of tech gloom

Tencent shares fell as much as 2.5% on Thursday to drop below their 200-day moving average for the first time since 2016

Hong Kong: The tech rout is getting so bad that even Tencent Holdings Ltd is struggling to hold above a key technical level.

The shares fell as much as 2.5% on Thursday to drop below their 200-day moving average for the first time since 2016. The Shenzhen-based giant, Asia’s biggest company by market value, has now tumbled almost 20% since its 23 January high, losing some $114 billion. To put that into context, fewer than 3% of Europe’s biggest companies are worth that much.

Risk-averse traders have been dumping tech and Internet stocks worldwide for weeks, unwinding one of last year’s most profitable trades amid concern over lofty valuations. Increasing evidence of a slowing smartphone market added more fuel to the selloff on Thursday, as did a reported US investigation into China’s Huawei Technologies Co. following a ban on ZTE Corp. earlier this month.

Hong Kong-listed Tencent has been a favourite among investors and analysts alike—it hasn’t had a single sell rating in more than two years. While breaching the 200-day moving average shows just how bearish sentiment has turned on global tech, it doesn’t necessarily spell danger for Tencent, which more than doubled in 2017 after the last time it touched that level.

The shares pared losses to 1.2% at the close, to hover just above the 200-day average. Bloomberg

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