BEIJING – Tencent Holdings fell the most in over a year, dragging Chinese gaming stocks lower as investors grew concerned about its mobile gaming business and some funds rotated back into artificial intelligence-related names.
The company’s Hong Kong-listed shares sank as much as 7.1 per cent, the most since April 2025, as some traders cited worries that its mobile gaming revenue could have declined.
The sell-off dragged the Hang Seng Tech Index down 3.5 per cent, while fellow game developers NetEase and XD also dropped more than 6 per cent.
“Gaming stocks saw a sharp sell-off amid rumors of declining Tencent mobile revenue,” BNP Paribas’ sales desk wrote in a note to clients on Juy 22. The Shenzhen-based company is set to report second-quarter earnings on Aug. 12.
The likely revenue drop could give investors an excuse to take profits after Tencent’s recent rally, said Steven Leung, executive director at UOB Kay Hian. Some funds also appear to be rotating into AI-related stocks, he added.
Tencent reported weaker-than-expected domestic and international games revenue for the March quarter amid a challenging time for the global games industry. The consensus estimate now expects it to report about 11 per cent growth in overall gaming revenue for the June quarter, data compiled by Bloomberg show.
Leonid Mironov, portfolio manager at Gavekal Capital, said Tencent’s decline looks “flow-based”. Unlike mainland-listed stocks, Hong Kong names don’t benefit from the national team’s support, leaving them more vulnerable to outflows.
After Tencent’s gains in recent weeks, investors were taking profits, he said. The stock rose about 10 per cent in the first three weeks of July.
“On a rotation day, everyone’s looking for reasons and whatever sounds negative works,” Mironov added. “Personally I don’t have gaming as a big driver for Tencent anymore, but then of course it’s still a part of the business.” BLOOMBERG
