International investors such as Warren Buffett, Naspers, and SoftBank have been selling Chinese technology giants’ stocks.
In the latest development, a major shareholder sold Tencent shares worth $7.6 billion on the Hong Kong market.
Prosus, a subsidiary of South African investment firm Naspers, said in a statement that it had transferred 192 million Tencent shares to Hong Kong’s clearing and settlement system and sold more than 1 million shares on September 8, reducing its stake to less than 28%.
Prosus previously stated that it would sell Tencent shares to fund its buyback plan.
Tencent is now China’s most valuable company. On August 17, Tencent released its financial report, showing that its net profit was 18.6 billion yuan in the second quarter, down 56% year-on-year.
Tencent, in addition to other technology stocks like Alibaba and BYD Auto, have once been considered the most lucrative Chinese stocks for investors. But now big-name investors are divesting. These stocks have been sold off one after another.
Analysts believe that this is related to CCP’s increasingly stringent regulatory environment, zero-COVID policy, and economic challenges.
Investors are worried about the prospects of China’s big companies as Chinese authorities are tightening their control over the private sector and the faltering of the economy due to its harsh COVID lockdown.
A month ago, Japan’s SoftBank Group said it had reduced its stake holding in Alibaba on a large scale.
E-commerce giant Alibaba has long been China’s most valuable company. However, SoftBank Group has recently sold Alibaba shares through forward contracts, bringing in more than $17 billion.
Alibaba’s latest filing shows that the company laid off more than 9,200 employees in the second quarter, after cutting nearly 4,400 in the first quarter of this year.
Meanwhile, billionaire Warren Buffett’s Berkshire Hathaway is also cutting its stake in electric vehicle maker BYD.
A report on September 10 revealed that Berkshire sold about 8% of BYD’s shares for about $600 million. The sales were conducted on August 24 and September 1.
This is the first time in 14 years Buffett reduced his holding in BYD. His company initially invested $232 million in BYD in 2008.
The sell-offs of Chinese technology stocks by the large investors indicate a turning point in investors’ withdrawal from China’s private sector.
Ke Yan is an analyst at Singapore-based research firm DZT Research. He said that there is a big question mark in the growth model of Chinese tech giants such as Tencent and Alibaba.
Besides, the Chinese Communist Party’s crackdown on all listed companies abroad has brought great uncertainty for these companies.