Key Takeaways:
The Hang Seng Tech Index slid 3.1% to 4,663 on Wednesday after Tencent Holdings (0700.HK) tumbled 7% on mobile gaming revenue concerns.
"The potential revenue downfall could be an excuse for the market to take profits on Tencent's recent gains," said Steven Leung, executive director at UOB Kay Hian. Tencent had risen about 10% in the first three weeks of July before Wednesday's selloff.
The selloff spread across Hong Kong-listed technology names. NetEase (09999.HK) dropped 7.3% to HK$193.2, making it the worst-performing blue chip, while Kuaishou Technology (01024.HK) fell more than 6%. Alibaba Group (09988.HK) declined 2.9%, JD.com (09618.HK) lost 2.2%, and Baidu (09888.HK) slid 2.8%. Semiconductor Manufacturing International Corp. (00981.HK) fell 3.8%, Xiaomi Corp. (01810.HK) dropped 2.9%, and Meituan (03690.HK) declined 2.3%. XD Inc. (2400.HK), another game developer, also fell more than 6%.
The selloff erased roughly 10% of Tencent's July gains. BNP Paribas' sales team wrote in a client report that gaming stocks were heavily sold off on rumors of a decline in Tencent's mobile revenue. The Hang Seng Index fell 1% to 24,868, with turnover reaching HK$260.6 billion.
Tencent's short-selling volume reached HK$3 billion, representing 17.1% of its total turnover, while NetEase's short-selling ratio hit 28.1%, the highest among major tech stocks. JD.com also saw elevated short-selling at 43.3% of its turnover, and Xiaomi's ratio stood at 31.1%, indicating broad bearish bets across the sector.
The trigger for the selloff was a Bloomberg report citing traders who expected Tencent's second-quarter mobile gaming revenue to edge lower. BNP Paribas' sales team reinforced the move by flagging the rumor in a client note. Tencent's mobile gaming business, which includes titles such as Honor of Kings and PUBG Mobile, has been a core revenue driver, and any slowdown would weigh on the company's overall growth trajectory.
Tencent's decline of 6.4% to HK$443.6 marked its largest single-day drop since April 2025. The stock had been one of the best performers in the Hang Seng Tech Index this month before Wednesday's reversal.
The selloff comes ahead of Tencent's second-quarter earnings report, where investors will scrutinize mobile gaming revenue trends. Any confirmation of a decline could extend pressure on the stock and its peers, given Tencent's weighting in the Hang Seng Tech Index. The company's gaming division accounted for roughly 30% of its total revenue in the first quarter, making it the largest single contributor to earnings.
The Hang Seng Index's decline to 24,868 pushed it further below the 25,000 level, a key psychological threshold. The index has struggled to hold above that mark as concerns over China's economic recovery and regulatory uncertainty in the technology sector persist.
This article is for informational purposes only and does not constitute investment advice.
