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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.

Chinese technology companies Alibaba Group Holding Limited (HKG: 9988) and Tencent Holdings Limited (HKG: 0700) are the two biggest Asian corporations today, by market capitalisation.

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.

Practise buying and selling Hong Kong stocks with an IG demo account now

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.

Practise going long or short on Hong Kong-listed shares with an IG demo account

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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