Tencent Shares Decline on Potential $7.6B Stake Sale

Shares of Tencent Holdings Ltd. declined on Thursday after major stakeholder, Naspers Ltd.’s Dutch e-commerce firm Prosus NV, was reportedly planning to offload its holdings.

The news pushed the Chinese internet giant’s shares down by 2.2% to HK$304.80 to hit a three-week low and largely contributed to the Hang Seng index’s weakness, which dropped 1% at the close.

The slump brings Tencent’s losses to more than 20% from its high in June.

Potential Tencent Stake Sale

Tencent shares worth $7.6 billion were reportedly registered to Hong Kong’s Central Clearing and Automated Settlement System (CCASS), raising speculation that Prosus was looking to sell some of its 29% stake.

The report said about 192 million shares worth $7.6 billion, representing a 2% stake in the Shenzhen-based company, were added to the platform the previous day.

Prosus, which became a Tencent shareholder after its parent Naspers invested in the company in 2001, was the most likely seller as it has been gradually divesting its holdings in the Chinese firm to gain the necessary funding to repurchase its shares.

International investors have been reducing the shares they own of Chinese tech companies due to Beijing’s crackdown and regulatory efforts to cut back the influence of domestic tech industry giants, from Tencent to Alibaba Group Holding Ltd., to avoid anti-monopoly practices.

The move, however, has weighed on the sector. The S&P 50 index, which comprises the 50 biggest companies in the country’s tech sector, has tumbled 36% in the last 12 months.

Tencent itself has been reducing its stake in tech firms, such as JD.com Inc. and Singapore’s Sea Ltd, to ease the pressure from regulators.

In August, sources with knowledge of the matter stated the gaming and social media company was planning to offload about CN¥100 billion ($14.5 billion) of its $88 billion listed equity portfolio this year.