Battle of the tech titans: Alibaba vs. Tencent share price
All the latest from the market rivalry on home soil between Chinese tech giants Alibaba and Tencent.
Alibaba currently has a market value of US$549 billion, while Tencent claims a share cap of US$422 billion.
The two are not only considered the most financially successful Asian companies, but also among the most innovative when it comes to product offerings and business practices.
Fear of cannibalisation?
Alibaba’s historic initial public offering (IPO) on the Hong Kong Exchanges and Clearing Limited last month raised over US$11 billion at a retail price of US$24 per share.
Although this is the biggest share sale in Hong Kong in a decade, it is less than half of the US$25 billion raised in its primary listing on the New York Stock Exchange (NYSE).
On the other hand is rival Tencent, who approached things in the reverse. The Shenzhen-based entity listed first in Hong Kong in 2004, before its music division’s (Tencent Music Entertainment Group) US$1.1 billion IPO on the NYSE late last year.
If there was any fear that the market competition would affect stock value in the short run, that has so far been allayed, at least based on the performance of each company’s share price.
It’s been three weeks since Alibaba shares went on sale in Hong Kong, and share price is now trading above its debut level by 7.33% at US$25.76 per share.
Comparatively, Alibaba’s rival Tencent has also managed to see its stock increase roughly three percent in value in the same time frame.
This lack of negative impact is further emphasised by the fact that Alibaba’s share price on the New York Stock Exchange has also remained relatively robust. Trades are currently priced at US$26.25 apiece, up 5.4% from three weeks ago.
This trend is in line with the sentiments of IG Asia Market Strategist Jingyi Pan, who had noted that the Hong Kong listing could, in fact, boost its primary US listing.
Where will share prices go from here?
Despite the recent revival, in part due to excitement drummed up by the healthy competition, Tencent shares – priced higher than Alibaba’s by around 42% - are down around 16.4% year-on-year.
A lot of this has to do with the US-China trade war, which has shaken investor confidence in the last 12 months.
As noted by Pan, much of global trading sentiment will rest on December 15, when the new round of US tariffs on US$160 billion worth Chinese goods (including smartphones) will be imposed. This will indicate if there is a trade deal on the table, or if the two countries are closing in on one.
Still, in terms of the latest broker ratings, 37 analysts polled by CNN Business held a ‘buy’ position on Tencent stock, with four pointing to ‘outperform’, and four on ‘hold’.
As for Alibaba, a group of Goldman Sachs analysts gave a ‘buy’ rating overall, predicting a 30% growth in value over the next one year.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.