Tencent Holdings Ltd. cut its stake in Singapore’s Sea Ltd. by selling $3 billion in shares, sparking a rout in the Southeast Asian gaming and e-commerce company.
The deal will likely inflame speculation Tencent is planning to pare its holdings in some of China’s biggest tech names from Meituan to Kuaishou Technology, as it pivots toward overseas growth and new areas such as the metaverse. China’s social media and gaming leader controlled a portfolio of investments worth $185 billion at the end of September, Bloomberg Intelligence estimates.
The share sale comes less than a month after Tencent said it would hand out more than $16 billion of JD.com Inc. stock as a one-time dividend, an effort to divest most of its stake in China’s No. 2 online retailer. The surprise move was seen as being in response to Beijing’s push to curb anticompetitive behavior and open up closed ecosystems.
China’s anti-monopoly rules and regulators’ concerns about data privacy as well as Web security may lead to more divestment in the country’s internet space in the coming months. Potential changes in ownership may cause short-term operational disruption, but JD.com and Weibo’s market position as well as strong financial profile may buffer them against ratings-related risks.