Hong Kong equity traders can’t get enough of Tencent Holdings Ltd., the $ 930 billion giant that is at the pace of its biggest monthly gain.
They are paying for bullish derivatives that track the Chinese internet firm and buy thousands of January call options that expire on Thursday. The price of a Tencent contract – which bets on shares will go from HK $ 800 due to expiration – rose to 90,300% on Monday. Traders were also quick to unload their bearish sales, with one of the most quoted contracts losing 84% of value.
Shares rose up 10% on Monday to HK $ 760, accounting for about two-fifths of the Hang Seng index gains. The Hong Kong benchmark rose 2.1% and will close above 30,000 key points for the first time since May 2019.
Tencent has become a major target for mainland merchants flooding record amounts of cash in Hong Kong.listed shares this year, with the net purchase of shares representing about a quarter of the total money earned, according to exchange data. The buying frenzy has also increased Tencent’s market value by about $ 232 billion this year, the largest worldwide, according to data collected by Bloomberg. Tesla Inc. is the second winner, with an increase of $ 134 billion.
Tencent shares are now trading at almost 39 times the earnings estimated by analysts over the next twelve months. While it is well above the 30-year average since Bloomberg began tracking data in 2005, it is still below the recent multiple of 42 reached in 2014 and 2018. height of Chinese equity bubble in 2007.
On Monday, analysts at Citigroup Inc. raised its target price to the company by 19% to HK $ 876, the highest among analysts tracked by Bloomberg, citing the expansion and growth of the company’s market share in the gaming sector and others digital business.
Tencent also receives an additional boost by participating in the city’s initial fast-growing public offering market. Kuaishou Technology, with the support of Tencent, is trying to raise up to $ 5.4 billion in Hong Kong in what would be the largest IPO of the Internet from Uber Technologies Inc.
With the recent preparation, Tencent is quoted at its highest recorded price. The tightening of regulatory oversight that led to a sale to rival Alibaba Group Holding Ltd. has been largely avoided. and that it forced its partial ownership Ant Group Co. to abandon a IPO.