Tencent share price plummets 10%, here's what it means for ASX investors

What does the latest Tencent news mean for ASX investors?

| More on:
A gamer slumps his head in his hands in front of two gaming screens

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in Chinese tech and gaming giant Tencent Holdings Ltd (HKG: 0700) suffered a volatile trading session yesterday. At one point, more than 10% of the company's value had been erased during trade. The volatility and price weakness are flowing onto ASX investors through the Betashares Asia Technology Tigers ETF (ASX: ASIA).

So, what is causing these downward movements to one of the biggest companies in the world… let's take a look.

Gaming dubbed 'spiritual opium'

It was a rollercoaster trading session on the Hong Kong exchange for Tencent investors yesterday. Shares quickly fell by 10.8% before recovering to a 6.1% drop by the end of trading.

Concerns around tighter gaming regulations appear to be behind the erratic behaviour. This followed a scathing report released by the Chinese state media, referring to games as "spiritual opium". The story mentioned reports of children playing Tencent's Honor of Kings for eight hours a day.

Following the news, Tencent announced increased limits on playtime for minors. Additionally, the company plans to block children under the age of 12 from making in-game purchases.

Furthermore, Tencent suggested the possibility of banning games completely for kids under 12 years old. The shocking move clearly blindsided investors – prompting some shareholders to sell now and ask questions later.

Impact on ASX investors

The continued selloff in the Tencent share price puts further pressure on ASX investors of the Betashares Asia ETF. According to the fact sheet, Tencent makes up 9.7% of the exchange-traded fund, making it the fourth-largest holding.

However, Tencent is not the only company weighing on the fund. Rather, this is just the latest development in China's crackdown on industries that are considered to be creating 'social discontent'.

The uncertainty has led to downward pressure on the ASIA ETF over the past six months. As a result, ASX investors of the ETF are down 23% during the period.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

man looks up at apple on his head
International Stock News

Why did Warren Buffett sell more Apple shares?

Does Buffett know something we don't?

Read more »

A male party goer sits wearing a party hat and with a party blower in his mouth amid a bunch of balloons with a sad, serious look on his face as though the party is over or a celebration has fallen flat.
International Stock News

What snapped the S&P 500 winning streak last night?

The S&P 500 almost made October a winner, but fell at the final hurdle.

Read more »

Man going down a red arrow, symbolising a sliding share price.
International Stock News

Why Nvidia stock is sinking today

Investors were spooked by economic data and the ambitions of a deep-pocketed rival.

Read more »

Rede arrow on a stock market chart going down.
International Stock News

Why Microsoft stock is sinking today

Microsoft just beat quarterly earnings estimates. So why is the stock falling?

Read more »

US economy and sharemarket with piggy bank
Share Market News

Here's why Goldman Sachs sees a decade of lower returns ahead for US shares

Aussie investors have placed a lot of faith in US shares this year.

Read more »

ETF written in gold with dollar signs on coin.
ETFs

Here's why the iShares S&P 500 ETF (IVV) flew 6% higher in October

Investors are very keen on US shares at the moment.

Read more »

Man pumping petrol
International Stock News

Where will Tesla shares be in 10 years?

This historically booming stock might not live up to the hype.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

46% of Nvidia's revenue came from 4 mystery customers last quarter

Nvidia's incredible growth is increasingly reliant on just a handful of customers.

Read more »