Tencent shares exploded, market capitalization is about to reach $ 1 trillion, “sitting on the same tray” with Apple and Amazon

The sharp rise in shares of Tencent Holdings pushed their market cap to nearly $ 1 trillion for the first time in history. This is a testament to the enthusiasm of global investors in technology stocks.

Specifically, the Chinese Internet giant saw stocks rise 11% on the Hong Kong exchange on Monday – the best level since 2011 and propelled their market cap to nearly $ 950 billion. Options markets also saw a staggering rise with 1 contract that saw a 118,300% rise in trading on Tuesday. There were a few factors that drove the aforementioned boom in the first market being the Investment is placing high hopes on startup Kuaishou Technology, where Tencent holds a stake in the upcoming listing, as well as an upbeat report by Citigroup.

The easiest thing to see is that Tencent has benefited most from investors’ optimism in the technology sector recently. The company’s market capitalization added $ 251 billion in January alone – the largest in the world. More and more people warn loosening policy is inflating the stock bubble globally, especially in the US. US stocks are currently mainly driven by the rise of the Nasdaq Composite – the index leaning towards technology.

As investors look for a more affordable alternative, they look to the Hong Kong stock market. That helped the Hang Seng Index reach the best level of the major stock indices in the world last month. Tenent, which owns WeChat, has more than 1 billion users, is the main target for investors. Contributing to this rise was the record inflow of capital from mainland Chinese investors. Tencent, with its WeChat app with more than a billion users, is the primary target, accounting for nearly a quarter of the money flowing in through channels linking the two markets.

While Tencent is a favorite stock of many investors in Asia, its return to 100,000% since its IPO in 2004 makes the stock risky.

In 2018, the Chinese government heavily controlled the gaming industry – Tencent’s most profitable sector, at that time accounting for 40% of company-wide revenue. Coupled with a slumping Chinese economy and a weak yuan, the nine-month suspension of new game approvals resulted in a 22% drop in their shares.

An antitrust campaign that took place late last year also targeted companies like Tencent and Alibaba, especially online payments. But while rising legal risks caused Alibaba shares to fall 16% from the October peak, Tencent jumped.

If momentum continues, Tencent will be the second Chinese company to join the trillion-dollar club after PetroChina, which nearly reached this value in late 2007. American tech giants include Amazon, Alphabet and Microsoft is also worth more than $ 1 trillion with Saudi Arabian Oil.

Tencent was founded in 1998 by five college classmates. Led by Pony Ma Huateng – which owns the WeChat app – is the primary communication tool for young Chinese.

Tencent reported 38.5 billion yuan ($ 5.9 billion) in net revenue for the three months ending September, recording a profit of 11.6 billion yuan from investments in outside of its businesses. company.