A new Exchange-Traded Fund (ETF), the Roundhill China Dragons ETF (DRAG, Financial), has been launched to capture the performance of China's leading large-cap companies. The fund tracks an equal-weight basket of 5 to 10 of China's largest and most innovative tech companies, currently including Tencent (TCEHY), Pinduoduo (PDD), Alibaba (BABA), Meituan (MPNGY), BYD (BYDDY), Xiaomi (XIACY), JD.com (JD), Baidu (BIDU), and NetEase (NTES).
Tencent reported solid second quarter results, with revenue growing in the high-single digits and the bottom line almost doubling. Similar to many other Chinese stocks, Tencent jumped in the last week, and we can hope that sentiment might finally change regarding Chinese stocks. Tencent still has several growth opportunities in International Games, Online Advertising, and FinTech.
Chinese stocks have surged due to an $114 billion stimulus package aimed at boosting liquidity and economic growth. Tencent, despite lagging behind other Chinese tech giants, is well-positioned to benefit from increased consumer spending and improved market sentiment. Tencent's gaming, advertising, and fintech segments are expected to see significant growth from the stimulus measures.
Here is how Tencent Holding Ltd. (TCEHY) and Alps Electric (APELY) have performed compared to their sector so far this year.
On Tuesday, the Chinese government cut interest rates, lowered bank reserve requirements, and lowered down payments on homes. Shares of consumer-focused companies in China rallied on news of the stimulus measures.
The Chinese economy has struggled this year. Investors are split on where things go from here.
Tencent Holdings Ltd TCEHY TCTZF is harnessing the power of AI to shake up the digital advertising space in a big way.
Prosus, an Amsterdam-listed tech investment holding, trades at a 38% discount to NAV, primarily composed of publicly listed securities like Tencent. Prosus has been divesting Tencent shares and buying back its own stock at a discount, boosting NAV per share by 6-7% annually. The company's strategy increases shareholder exposure to Tencent, enhancing returns compared to a standalone Tencent investment, with expected mid-teens growth in NAV and share price.
A new video game title launched on Tuesday by a Tencent-backed startup has quickly become the most-played game on a major online platform, highlighting growing interest in Chinese-developed titles.
Tencent stock has outperformed US tech peers as of late. The company has not posted the acceleration in revenue growth that I had hoped for. I adjust my fair valuation in light of current Chinese market conditions.
Tencent Music Entertainment Group NYSE: TME is the largest music streaming company in China. The company's shares have been a bright spot for investors in the country over the past 52 weeks, providing a total return of 84%.
There is still a lot of work to be done, but it is starting to look like the technology sector in China's stock market could soon be about to pose a recovery. There are not too many investors brave enough to venture into overseas markets, let alone China, given the current geopolitical tensions that negatively affect business valuations in the region.