A shareholding reduction announcement caused the Tencent concept stock to fall in response.

UBS reduced its holdings of Chinese concept stocks such as Tencent Holdings and NetEase, and Charlie Munger's three consecutive quarters of increasing positions have failed to restore Alibaba's decline... The Chinese concept stocks have been hotly debated at the beginning of the new year because of the continuous decline.

In 2021, about 80% of the more than 200 companies with over 200 concept stocks have fallen in share prices, and about 40 companies have fallen by more than 80%.

The market value of Gaotu and Good Future has shrunk by more than 90%.

After the big waves rush into the sand, where is the way out for China Concept Stocks in the future?

　　By Zhang Zhongan Wenjing, All Media Reporter, Guangzhou Daily

　　Market focus

　　Tencent once again reduced its holdings of multiple Tencent stocks and fell

　　After reducing its holdings of JD.com, Tencent once again sold its holdings.

On January 4, Tencent announced that it would convert its Class B shares in Sea Limited (Donghai Group, also known as "Sea Group") into Class A shares and reduce its holdings of 14,492,751 Class A shares in the company.

As a result, Tencent’s stake in Sea will be reduced from 21.3% to 18.7%, and its voting rights in Sea will also be reduced to less than 10%.

If calculated based on the current stock price, Tencent is expected to cash out about US$3 billion.

　　According to public information, Sea Limited was founded in 2009, and it owns three major business sectors: e-commerce platform Shopee, electronic game platform Garena, and digital financial business SeaMoney.

When Sea first went public, Tencent was its largest shareholder, holding 39.8%.

Sea, which has a huge market value and started its game in Southeast Asia, also has an industry position and business model similar to Tencent in the country. Therefore, Sea has the nickname of "Small Tencent in Southeast Asia".

　　Affected by the news, as of the close of US stocks on January 5, Donghai Group's stock price fell 11.41% to US$197.840 per share, with a market value of US$109.73 billion.

The share prices of several Tencent stocks fell.

Flush data shows that as of the close of US stocks on January 5, Pinduoduo fell 11.19% and Jingdong fell 6.04%.

As for Hong Kong stocks, Hong Kong stocks closed on the 5th. Tencent Holdings fell 4.31%, Meituan fell 11.16%, and Kuaishou fell 7.53%.

The outside world is speculating as to which one will be reduced by Tencent next.

　　However, Tencent announced in its announcement that it intends to maintain its majority stake in Sea for a long time and will continue to maintain its existing business partnership with Sea.

Tencent will be subject to a lock-up period and will not be able to further sell Sea shares in the next six months.

Regarding the reduction, Tencent stated that the transaction will provide resources to support other investment and social responsibility projects.

　　Industry analysis pointed out that in the context of interconnection, the “dominant one” is being weakened, and the major giants are gradually opening up phased openings.

More and more large companies choose to actively reduce their "weight" in the domestic Internet industry.

If Tencent wants to make further plans to reduce its holdings, it will be based on various considerations. The realization of investment income is one aspect, and the regulatory dynamics are also the reason for its consideration.

The analysis predicts that with the change of investment direction, Tencent may invest more capital in social value, real economy and other fields in the future.

　　The performance report shows that Tencent's revenue in the third quarter of 2021 was 142.37 billion yuan, a year-on-year increase of 13%.

The net profit attributable to equity holders of the company was 39.5 billion yuan, up 3% year-on-year, and the net profit under non-international accounting standards (Non-IFRS) was 31.75 billion yuan, down 2% year-on-year.

　　Industry view

　　Many Chinese concept stocks face three choices

　　In 2021, China concept stocks listed overseas suffered a "cold winter" in valuation, with a cumulative decline of nearly US$800 billion.

The China Concept Internet's LOF for benchmarking China's concept stocks has fallen by nearly 50% in one year, and the China Concept Internet ETF has fallen by nearly 70% from its high point.

Some analysts believe that the irrational decline in China's concept stocks was mainly affected by factors such as changes in profitability, delisting risks, and stricter supervision.

　　On the one hand, under the new regulatory policies, the business model and profit logic of Chinese concept stocks such as K12 extracurricular education and training have been reshaped, and the value of listed companies has been revalued.

On the other hand, the rectification of Internet companies has brought the expansion of related companies back to rationality, affecting short-term financial expectations, and secondary market valuations have also been compressed.

　　The new regulatory rules for listed companies also put pressure on China's concept stocks.

"Changes in the regulatory environment are a factor, and on the other hand, the foreign company accountability law expectation, which also makes the Chinese concept stocks delisting risk. Once the Chinese concept stocks are transferred, it may cause the reconstruction of the valuation system and affect the overall Valuation and pricing level.” Financial commentator Guo Shiliang believes.

　　Many Chinese concept stocks are delisted or transferred

　　On January 5, 2022, China Mobile returned to the A-share listing, opened high and went low, and closed slightly up 0.52%.

On December 3, 2021, Didi suddenly announced that it would start delisting on the New York Stock Exchange.

It was only 156 days since it was listed on the US stock market.

When Didi announced the delisting of U.S. stocks, it also stated that it would start listing on Hong Kong stocks.

"Maybe this is the path of many Chinese concept stocks listed in New York in the future, switching to Hong Kong stocks or returning to A shares. Of course, there may be privatization and delisting." A brokerage analyst who has been concerned about China concept stocks for a long time believes.

　　Up to now, in addition to Didi, Alibaba, JD.com, Baidu, Xiaomi, Weibo, NetEase, Bilibili and other previously listed Chinese stocks in New York have switched to Hong Kong stocks, either with secondary listings or dual listings.

　　Returning to A shares has also become the choice of China Concept Stocks in recent years.

In 2015, Focus Media's backdoor Hedy Holdings was listed on the Shenzhen Stock Exchange, and in 2018, the 360 ​​backdoor Jiangnan Jiajie listed on the Shanghai Stock Exchange.

　　In addition, privatization and delisting will also be normalized.

Since 2020, China's concept stocks have continued to announce privatization and delisting. For example, Changyou, Jumei Youpin, and Sina have all delisted from New York.

　　Insiders: The signal to stop falling is not yet obvious

　　Some insiders believe that although China concept stocks have fallen sharply, it is not appropriate to rely solely on technical graphics to buy bottoms when the trend is not yet clear.

　　First of all, we must really understand the listed company.

Zhao Qian, an analyst at China Securities, said that many of these Chinese concept stocks are not the leading stocks, and the future profit growth and growth space need to be carefully judged. In particular, many companies have been losing money since they went public.

Secondly, there is no obvious stop signal yet. Do you have enough time and patience to wait for the reversal?

In addition, the trading rules and selection preferences of different overseas markets must also be considered.