The $220 billion rout in shares of Tencent has entered uncharted territory.
Not only has the Chinese internet giant lost more market value than any other company worldwide this year, its 38 per cent drop from a closing high in January is now the deepest since Tencent’s 2004 listing in Hong Kong. The stock has been mired in a downtrend for a record 259 calendar days and on Tuesday matched its longest streak of consecutive losses after falling for an eighth session. It has never fared worse relative to global technology shares.
It’s a dramatic reversal for a stock that returned more than 67,000 per cent from its initial public offering through January, by far the best performance among large-cap companies globally during that period. While Tencent’s hugely popular online games, WeChat messaging service and budding finance business made it a favourite of both institutional and individual investors, sentiment has soured after the company faced an onslaught of bad news this year.
The first blow came almost nine months ago, when global concerns over frothy tech valuations dragged down Tencent and many of its peers. In March, losses accelerated after Tencent warned of weaker margins and one of the company’s oldest shareholders said it was unloading a nearly $11bn stake.
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Read more:
Tencent undertakes restructuring for first time in 6 years
China's new gaming curbs wipe $20bn off Tencent market value
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That was followed by a wave of selling from Chinese investors, Tencent’s first profit drop in at least a decade, and a regulatory bottleneck on game approvals in China. The stock, which commands the biggest weighting in MSCI’s global emerging markets index, has taken another beating in recent days amid worries about slowing Chinese growth and a weaker yuan. It fell 1.7 per cent to HK$293.80 on Tuesday, its lowest close since July 2017.
One group that’s sticking with Tencent despite this year’s travails: sell-side analysts. All but one of the 49 forecasters tracked by Bloomberg has the equivalent of a buy rating on the stock, with the consensus 12-month price target implying a 52 per cent rebound.
But given that those same analysts failed to predict the current sell-off, investors may want to think twice about buying now. Even after its slump, Tencent is trading at 25 times projected earnings over the next 12 months, according to data compiled by Bloomberg. That compares with multiples closer to 20 when the shares bottomed after major declines in 2011 and 2008.
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BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
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Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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