In addition to growing fears about Emerging Market contagion (where despite the Turkish Lira’s latest surge, we have seen the Chinese Yuan tumble to fresh one year lows amid a surge in the US Dollar), this morning traders were stunned by Chinese tech giant Tencent, which came out with numbers that were simply awful, missing on the top and bottom line, reporting revenue of CNY 73.7BN, below the CNY 77.7BN expected, More importantly, its profit of CNY 17.867BN was far below the CNY 19.3BN expected, and down from CNY 18.231BN a year ago: Tencent’s first profit drop in a decade.
The news sent Tencent ADRs tumbling to the lowest level since August 2017.
Tencent’s earnings disappointment, which sent the stock plunging and dragged EM futures lower…
…followed an drop earlier in the session in shares of Asian video game companies such as Tencent, Nexon and Nintendo on concerns over delays in new games releases in China, as Beijing halted approvals for game licenses. As Reuters notes, many firms have been awaiting games sales licenses since March after Beijing reformed and reorganized the government bodies that oversee the sectors earlier this year.
Tencent’s plunge hit other Asian tech names in sympathy, with other members of the “Asian Acronyms” tech stocks, either BATs (Baidu, Alibaba, Tencent) and TATS (Tencent, Alibaba, Taiwan Semi, Samsung), sliding sharply.
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