Tencent Extends Drop From Record to 11% on Alibaba Switch

By Jonathan Burgos

Tencent Holdings Ltd. (700) dropped for a second day to its lowest close in almost three months after being dethroned as Asia’s biggest Internet company by Alibaba (BABA) Group Holding Ltd.
Tencent sank 1.8 percent to HK$118.90 at the close in Hong Kong, extending its retreat to 11 percent from an all-time high set in August. The Chinese provider of instant-messaging services including WeChat had a market value of $146.3 billion yesterday, compared with $221.6 billion for Alibaba, which began trading in New York Sept. 19 after completing its record initial public offering.
“We like Alibaba better than Tencent,” said Daphne Roth, head of Asian equity research at ABN Amro Private Banking, which
manages about $218 billion, by phone from Singapore. “Alibaba has significant e-commerce business. Alibaba seems better able to monetize its membership whereas Tencent we don’t really see it being able to monetize all of its subscriber base.”
Tencent has lost about $17 billion in market value since saying last month that it expects growth in mobile-game revenue to plateau. Analysts are keeping the faith, boosting their average price target for the shares to the highest on record and 27 percent above their current level, according to data compiled by Bloomberg.

Visitors queue up in front of the stand of Tencent Interactive Entertainment during an... Read More

Chen Limin, a Shenzhen-based spokeswoman at Tencent, didn’t immediately respond to a request for comment.
Alibaba slipped in its second day of trading yesterday, after jumping almost 40 percent in its debut, as bankers lifted the size of the IPO to a global record of $25 billion. Alibaba raised $21.8 billion before underwriters exercised a so-called greenshoe option to increase the size of share sale by 15 percent amid strong demand.

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Technology companies were the biggest drag on the MSCI Asia Pacific excluding Japan Index today. Citic 21CN Co., in which Alibaba owns a stake, slumped 13 percent in Hong Kong. It’s still up 814 percent this year. China Dongxiang Group Co., which bought part of an Alibaba investment fund in 2011, slid 1.3 percent today, after tumbling 13 percent yesterday.
“There’s some switching in the Internet sector following the listing of Alibaba, as some funds may have limits to investing in certain sectors,” Sam Chi Yung, a strategist at Delta Asia Securities Ltd. in Hong Kong, said by phone. “Some investors probably think Alibaba is relatively cheaper and prospects are better.”