Bernstein: TENCENT's Valuation Strained Amid Concerns Over Delayed Chatbot Development
Chinese Internet Sector Performance: The Chinese internet sector had a lackluster start in 2026, with KWEB remaining flat year-to-date, while BABA-W outperformed due to its AI agent service, and TENCENT lagged behind amid significant short selling.
AI Chatbot Competition: The competition in the AI chatbot space is intensifying, with major platforms offering subsidies to encourage adoption, although the effectiveness of such strategies is questioned compared to past promotional methods.
Regulatory Concerns: The regulatory environment remains challenging, with investigations into companies like Pinduoduo and TRIP.COM-S contributing to market volatility, alongside rumors of a VAT increase that were later debunked.
TENCENT's AI Development: TENCENT's stock performance reflects investor concerns over its AI capabilities, with a recent valuation downgrade. The company is working on improving its chatbot business and aims to accelerate AI model development following a team restructuring.
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<Midday Update> HSI Ends Midday at 26,705, Gaining 138 Points; HSTI Reaches 5,367, Up 7 Points; ZIJIN MINING Surges Over 4%; HK & CHINA GAS, CK ASSET, WH GROUP, TIANGONG INT'L, and CONCH VENTURE Achieve New Record Highs
Market Performance: The Hang Seng Index (HSI) rose by 138 points (0.5%) to 26,705, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also saw slight gains.
Active Heavyweights: Notable movements included HKEX (+0.9%), PING AN (+0.4%), and TENCENT (+0.2%), while XIAOMI, BABA, and MEITUAN experienced minor declines.
Significant Movers: ZIJIN MINING surged by 4.7%, CHINAHONGQIAO increased by 3.9%, and CNOOC rose by 3.7%, while YUM CHINA fell by 4.6%.
Short Selling Trends: High short selling ratios were observed in several stocks, with YUM CHINA at 47.6% and MEITUAN at 25.8%, indicating significant market speculation.
CN SAMR Calls on Alibaba and Tencent to Address 'Involutionary' Competition Issues
Regulatory Action: China's State Administration for Market Regulation (SAMR) summoned major platform companies, including Alibaba, Douyin, Baidu, Tencent, JD, and Meituan, to ensure compliance with various laws and regulations.
Focus on Fair Competition: The SAMR emphasized the need for these companies to regulate their promotional activities and eliminate "involutionary" competition to maintain a fair market environment.
HKD3.7B Net Inflow to TRACKER FUND from Southbound Trading
Southbound Trading Inflows: TRACKER FUND (02800.HK) experienced significant net inflows of HKD3.7 billion, with the highest inflow of HKD2.5 billion in Shanghai-Hong Kong Stock Connect.
Short Selling Activity: Notable short selling figures included TRACKER FUND at $6.83 billion (37.94% ratio), BABA-W at $1.67 billion (15.43% ratio), and TENCENT at $1.35 billion (9.485% ratio).
Net Outflows: YOFC (06869.HK) saw a net outflow of HKD148.7 million, with a short selling amount of $338.64 million (11.959% ratio).
Overall Trading Summary: The total Southbound Trading net outflow was HKD0, accounting for 39.12% of the total transaction amount of HKD100.76 billion.
HSI Closes 465 Points Lower; AIA and Stanchart Drop 4%; Commodity Stocks Decline
Market Overview: The DJIA fell 1.3% as tech stocks were sold off, leading to a similar decline in the Hong Kong stock market, where the HSI ended down 1.7% at 26,567.
Financial Sector Performance: Major financial stocks like HSBC and HKEX dropped by 2.7% and 2.1%, respectively, while Bank of East Asia plunged 11% after reporting a significant profit drop and dividend cut.
Commodity and Gold Prices: Gold prices fell below USD 5,000/oz, impacting gold mining stocks, which saw declines of 5.9-7.6%. Oil prices also dropped nearly 3%, affecting major oil companies.
Tech Sector Decline: The tech sector experienced minor declines, with Tencent and Alibaba seeing drops of around 0.7% to 2.0%, while other tech stocks like Meituan and Baidu fell over 3%.
<Full-day Summary> HSI Falls by 465 Points; HSTI Declines by 48 Points; MEITUAN Drops More Than 3%; WH GROUP, SHK PPT, TIANGONG INT'L, MINTH GROUP, and CH OVS G OCEANS Reach New Peaks; Market Turnover Increases
Market Performance: The Hang Seng Index (HSI) fell by 465 points (1.7%) to close at 26,567, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines, with market turnover reaching $257.58 billion.
Active Heavyweights: Major stocks like Meituan, Ping An, and HKEX saw significant drops, with Meituan down 3.2% and Ping An down 2.2%. Xiaomi was the only heavyweight to gain, closing up 0.9%.
Notable Declines: Several constituents of the HSI and HSCEI, including Zijin Mining and Sinopec Corp, experienced substantial losses, with Zijin Mining dropping 7.6% and Sinopec Corp down 5.1%.
Gainers and New Highs: Despite the overall market decline, some stocks like Haidilao and WH Group saw gains, with Haidilao up 3.1% and WH Group hitting a new high, closing up 0.9%.
<Midday Update> HSI Falls 484 Points; HSTI Declines by 89 Points; MEITUAN Drops More Than 4%; CLP HOLDINGS, TIANGONG INT'L, MINTH GROUP, and CH OVS G OCEANS Reach New Peaks
Market Performance: The Hang Seng Index (HSI) fell by 484 points (1.8%) to 26,547, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines of 1.6% and 1.7%, respectively.
Active Heavyweights: Major stocks like Meituan, Ping An, Alibaba, and Tencent saw significant drops, with Meituan down 4.5% and Tencent down 1.7%, amidst high short selling activity.
Notable Declines: Companies such as Zijin Mining and China Life faced substantial losses, with Zijin Mining dropping 5.2% and China Life down 4.9%, reflecting a broader trend of declining stock prices.
Gainers and Losers: Healthyway Inc. experienced a notable increase of 18.8%, while Mongol Mining and Fit Hon Teng saw significant declines of 13.7% and 11.3%, respectively, indicating volatility in the market.
<Midday Update> HSI Ends Midday at 26,705, Gaining 138 Points; HSTI Reaches 5,367, Up 7 Points; ZIJIN MINING Surges Over 4%; HK & CHINA GAS, CK ASSET, WH GROUP, TIANGONG INT'L, and CONCH VENTURE Achieve New Record Highs
Market Performance: The Hang Seng Index (HSI) rose by 138 points (0.5%) to 26,705, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also saw slight gains.
Active Heavyweights: Notable movements included HKEX (+0.9%), PING AN (+0.4%), and TENCENT (+0.2%), while XIAOMI, BABA, and MEITUAN experienced minor declines.
Significant Movers: ZIJIN MINING surged by 4.7%, CHINAHONGQIAO increased by 3.9%, and CNOOC rose by 3.7%, while YUM CHINA fell by 4.6%.
Short Selling Trends: High short selling ratios were observed in several stocks, with YUM CHINA at 47.6% and MEITUAN at 25.8%, indicating significant market speculation.
CN SAMR Calls on Alibaba and Tencent to Address 'Involutionary' Competition Issues
Regulatory Action: China's State Administration for Market Regulation (SAMR) summoned major platform companies, including Alibaba, Douyin, Baidu, Tencent, JD, and Meituan, to ensure compliance with various laws and regulations.
Focus on Fair Competition: The SAMR emphasized the need for these companies to regulate their promotional activities and eliminate "involutionary" competition to maintain a fair market environment.
HKD3.7B Net Inflow to TRACKER FUND from Southbound Trading
Southbound Trading Inflows: TRACKER FUND (02800.HK) experienced significant net inflows of HKD3.7 billion, with the highest inflow of HKD2.5 billion in Shanghai-Hong Kong Stock Connect.
Short Selling Activity: Notable short selling figures included TRACKER FUND at $6.83 billion (37.94% ratio), BABA-W at $1.67 billion (15.43% ratio), and TENCENT at $1.35 billion (9.485% ratio).
Net Outflows: YOFC (06869.HK) saw a net outflow of HKD148.7 million, with a short selling amount of $338.64 million (11.959% ratio).
Overall Trading Summary: The total Southbound Trading net outflow was HKD0, accounting for 39.12% of the total transaction amount of HKD100.76 billion.
HSI Closes 465 Points Lower; AIA and Stanchart Drop 4%; Commodity Stocks Decline
Market Overview: The DJIA fell 1.3% as tech stocks were sold off, leading to a similar decline in the Hong Kong stock market, where the HSI ended down 1.7% at 26,567.
Financial Sector Performance: Major financial stocks like HSBC and HKEX dropped by 2.7% and 2.1%, respectively, while Bank of East Asia plunged 11% after reporting a significant profit drop and dividend cut.
Commodity and Gold Prices: Gold prices fell below USD 5,000/oz, impacting gold mining stocks, which saw declines of 5.9-7.6%. Oil prices also dropped nearly 3%, affecting major oil companies.
Tech Sector Decline: The tech sector experienced minor declines, with Tencent and Alibaba seeing drops of around 0.7% to 2.0%, while other tech stocks like Meituan and Baidu fell over 3%.
<Full-day Summary> HSI Falls by 465 Points; HSTI Declines by 48 Points; MEITUAN Drops More Than 3%; WH GROUP, SHK PPT, TIANGONG INT'L, MINTH GROUP, and CH OVS G OCEANS Reach New Peaks; Market Turnover Increases
Market Performance: The Hang Seng Index (HSI) fell by 465 points (1.7%) to close at 26,567, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines, with market turnover reaching $257.58 billion.
Active Heavyweights: Major stocks like Meituan, Ping An, and HKEX saw significant drops, with Meituan down 3.2% and Ping An down 2.2%. Xiaomi was the only heavyweight to gain, closing up 0.9%.
Notable Declines: Several constituents of the HSI and HSCEI, including Zijin Mining and Sinopec Corp, experienced substantial losses, with Zijin Mining dropping 7.6% and Sinopec Corp down 5.1%.
Gainers and New Highs: Despite the overall market decline, some stocks like Haidilao and WH Group saw gains, with Haidilao up 3.1% and WH Group hitting a new high, closing up 0.9%.
<Midday Update> HSI Falls 484 Points; HSTI Declines by 89 Points; MEITUAN Drops More Than 4%; CLP HOLDINGS, TIANGONG INT'L, MINTH GROUP, and CH OVS G OCEANS Reach New Peaks
Market Performance: The Hang Seng Index (HSI) fell by 484 points (1.8%) to 26,547, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced declines of 1.6% and 1.7%, respectively.
Active Heavyweights: Major stocks like Meituan, Ping An, Alibaba, and Tencent saw significant drops, with Meituan down 4.5% and Tencent down 1.7%, amidst high short selling activity.
Notable Declines: Companies such as Zijin Mining and China Life faced substantial losses, with Zijin Mining dropping 5.2% and China Life down 4.9%, reflecting a broader trend of declining stock prices.
Gainers and Losers: Healthyway Inc. experienced a notable increase of 18.8%, while Mongol Mining and Fit Hon Teng saw significant declines of 13.7% and 11.3%, respectively, indicating volatility in the market.
