The stock of China’s Tencent Holdings Ltd dropped for the first time in 10 days on Tuesday after Chairman Ma Huateng cut his stake in the company, which is the country’s biggest social networking and online entertainment firm.
Tencent’s stock slumped 5.34 percent to 161.40 Hong Kong dollars -- the most in almost a year -- in the benchmark Hang Seng index on Tuesday afternoon. Ma, who is the third-richest person in China, cut his stake to 9.65 percent from 9.86 percent, and raised 3.22 billion Hong Kong dollars ($415 million) by selling his shares, Bloomberg reported.
“If the chairman of a company starts selling, it probably means the market could start taking a beating,” Louis Tse, a Hong Kong-based analyst told Bloomberg. “The market has risen so much, it was expected to come down at some point.”
The Hang Seng index has surged 18 percent this year, hitting fresh seven-year highs on Monday. The surge in Hong Kong stocks sent Tencent's market capitalization to over $200 billion for the first time on Monday, making it more valuable than major U.S. technology giants such as Oracle ($190 billion), Amazon ($178 billion) and IBM ($161 billion), Reuters reported.
Although Hong Kong stock market’s bull run took a break on Tuesday morning, many investors believe the retreat will not last long.
“We expect the flows to invest in Hong Kong from mainland investors to continue,” Mandy Chan, head of Chinese and Hong Kong equities at HSBC Global Asset Management, told Reuters. “It was only a matter of time before we see a pick-up in these stocks.”