With the easing of pressure from authorities, Tencent shares may still see additional upshoots when compared to the level it is currently at this time.
The shares of Chinese multinational internet giant Tencent Holdings Ltd (HKG: 0700) have seen multi-month highs as the broader tech industry retraced their plunging valuation with improving regulatory measures from Beijing. As reported by Bloomberg, Tencent shares have now climbed by nearly double the price points back in October 2022.
This growth comes despite the 0.32% slump in the price of the company’s shares to HKD 370.20
Specifically, the shares have grown by about 95% since October 28, pushing back to the list of the most valuable companies in the world. At the time, the pangs in the Chinese tech industry combined with the aftermath of the global financial industry squeeze stirred the plunge of the shares to drop to their lowest price point since 2017.
The regulators at the time were so concerned about the prolific growth of these tech startups and the fears that they may be monopolizing the market. In 2020, the government fueled the crush of the Initial Public Offering (IPO) push of Ant Group, the fintech firm that is affiliated with Alibaba Group Holdings Ltd (HKG: 9988).
Should the IPO have been permitted to float at the time, it would have come up as one of the biggest in the world at the time. The refusal at the time marked the start of a broad-based crackdown, one that lasted for way more than 2 years.
One of the options that were being considered by the regulators at the time included splitting Alipay, the digital payments section of Ant Group. By decentralizing the powers of Alipay, the government hoped to taper down on the dominance of the digital payment outfit in the country’s financial ecosystem.
The industry may soon start enjoying new regulatory ease as the Bloomberg report shows that lawmakers are now beginning to raise tough concerns about the harsh regime that is stiffening the growth of these tech companies.
Tencent Shares, Others to Grow amid Easing Regulations
The current era is marked by the permission granted to Ant Group by the China Banking and Insurance Regulatory Commission (CBIRC) to expand the capital base of its consumer finance unit. With permission, the unit can now increase its capital base from 8 billion Yuan to 18.5 billion Yuan.
With the easing of pressure from authorities, Tencent shares may still see additional upshoots when compared to the level it is currently at this time. At the peak of the sanctions, about $2 trillion in capitalization was removed from the Chinese tech sector and this will come off as a new recovery milestone to look forward to.
The jump in the Hang Seng Tech Index (INDEXHANGSENG: HSI) over the past three months has further lent credence to the ecosystem’s revival across the board.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
