Tencent, Prosus and Naspers recover a bit

Tencent’s share price staged a bit of a recovery after its recent sharp fall, but not nearly enough to reverse the recent losses, nor enough to end 2023 in positive territory.

The increase of (not quite) 7% in its share price on the Hong Kong Stock Exchange from the recent low helped Prosus and Naspers to gain around 11% from their recent lows.

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Although Tencent recovered from the recent low of around HK$274 to nearly HK$294, the share is still way below its high of HK$415 at the end of January 2023.

The same applies for the share prices of Naspers and Prosus as Tencent accounts for the lion’s share of the net asset value of the Naspers/Prosus group.

The Hong Kong Stock Exchange was not kind to tech investors overall. The Hang Seng index ended 2023 nearly 14% lower. China’s second largest tech stock, Alibaba, declined nearly 15% since January 2023, while some of the other well-known technology companies saw their share prices fall by 50%.

Astounding gains

In contrast, US technology giants showed incredible gains. The Nasdaq Composite index – often coupled with the moniker ‘tech heavy’ – increased by 40% during the year.

US technology company Nvidia had a last minute spurt to end the year 246% higher, while Facebook owner Meta increased by an equally impressive 184%. Tesla’s share price increased by 130% last year.

Source: Prices sourced from Bloomberg

In general, US stocks benefitted from better economic prospects in that the US economy is strengthening. Lower inflation is also raising expectations that the US Federal Reserve will start to cut interest rates in 2024.

Tech shares got a further boost by the development of and investor excitement in artificial intelligence (AI). All the big technology companies announced large investments in the development of more powerful AI applications during 2023.

Gaming restrictions

On the other side of the globe, investors were at the receiving end of stricter measures by Chinese authorities to curb online gaming “addiction”. Chinese regulators published new draft regulations to limit spending on video games, in addition to earlier restrictions that limited the number of hours that children can play online computer games.

The new draft regulations seek to limit spending on online gaming by banning giving players rewards if they log in every day, the first time they spend money on the game and if they spend several times on the game consecutively.

The publishers of games will also be required to set limits on how much players can top up their digital wallets for in-game spending.

The draft regulations, published a few days before Christmas, aim to ban lucky draw features to minors.

It also wants to invoke mechanisms to prevent the sale of and speculation in virtual items in the online games.

Players can often add to characters’ strength by competing tasks and levels, and sell these avatars to less skilled players. A market for other virtual collectibles also developed.

The latest proposals come after strict rules announced in 2021, which included a policy that limited online gaming for people younger than 18 years to three hours each week.

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Currently, regulations allow players under 18 to play online games only between 8pm and 9pm on Fridays, Saturdays and Sundays.

Chinese gamers are also currently required to provide identification when registering to play online games under these rules.

The new draft regulations offered a bit in return to soften the blow to gaming companies, such as Tencent. The new rules make provision that authorities will review applications for the launch of new games within 40 days. However, the announcement of new rules once again created uncertainty about changes in Chinese policy and, subsequently, add to investors’ concerns.