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Temasek Holdings laughing all the way to the bank despite Tencent share price meltdown

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The bloodbath of Tencent share price must have rattled numerous investors. Since early 2018, Tencent share price free fell after the Chinese authorities’ criticism on the addictive effect of mobile games on children. Following that, Tencent started to implement self-imposed limitations on games for minors. In August 2018, it didn’t help that the group announced its first quarter profit drop in 13 years. The slew of bad news created the perfect storm for Tencent share price.

So did the meltdown of Tencent share price injure Temasek Holdings? From a high of HK471 to a low of HK260, Tencent share price suffered a massive correction in 2018, making it one of the worst performing stocks globally.

Temasek Holdings hold a small stake of less than 1% in the Chinese internet firm as at 31 March 2018. While Tencent share price crashed in the past one year, Temasek Holdings  can still laugh all the way to the bank despite the meltdown in Tencent share price. Why is this so? Tencent share price Tencent share price hit the skids

It appears to me that Temasek Holdings invested USD98 million in Tencent since 2015 because the investment shown up in the FY2015 financial report. Assuming that Temasek Holdings entered when Tencent share price was trading at the range HK130 to HK160, the state-linked firm will still be sitting on a paper profit of 100%.

Then again, US98 million is a pretty small sum of money for Temasek Holdings. So the plunge in Tencent share price is unlikely to cause significant dent to its asset portfolio’s value.

Given the spate of corporate governance issues of S-chips listed in Singapore Exchange, Temasek Holdings rarely invest in Chinese firms listed in local stock market. However, in Alibaba Group and Tencent Holdings, Temasek Holdings own stakes in two leading Chinese technology firms. It is possible that Temasek saw the growth potential in both companies in the era of Internet and made them part of its stable of growth stocks. The fact that Temasek Holdings bought at a time when Tencent share price had [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Cornerstone articles

Updated: January 21, 2019 — 9:11 am

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