Scottish Mortgage Investment Trust PLC (LSE:SMT) and London's band of China-focussed trusts are in the spotlight as Tencent Holdings said it plans to sell almost US$15bn of its investments as it shifts strategy amid Beijing's clampdown on anti-competitive behaviour.
The Chinese tech titan's listed equity portfolio is worth around US$88bn.
Food delivery service Meituan is one of the favourites to be offloaded, according to reports.
Although for the large part, there are still talks taking place to decide which stakes should be offloaded and at what price.
Tencent is the fifth largest holding in FTSE 100-listed Scottish Mortgage, the largest for Fidelity China Special Situations PLC (LSE:FCSS) (including a 6.2% direct holding and a 5.5% CFD), the largest for JPMorgan China Growth & Income PLC, second for JPMorgan Emerging Markets, fourth for Asia Dragon Trust PLC, sixth for Templeton Emerging Markets Investment Trust PLC (LSE:TEM).
London-listed trusts with exposure to Tencent (Portfolio Weighting %)
- JPMorgan China Growth & Income 8.36%
- abrdn China Investment 7.4%
- JPMorgan Asia Growth & Income 6.5%
- JP Morgan Em Mkt Inv Trust 5.9%
- Invesco Asia 5.6%
- Fidelity China Special Situations 5.5%
- Scottish Mortgage 5.2%
- Asia Dragon Trust 4.9%
- abrdn New Dawn 4.1%
- Templeton Emerging Markets 3.8%
- Fundsmith Emerging Equities Trust 3.5%
- Schroder AsiaPacific PLC 3.4%
- Schroder Asian Total Return 3.3%
- Martin Currie Global Portfolio 3%
- Polar Capital Technology 1.2%
- Fidelity Emerging Markets Ord 0.9%
- F&C Investment Trust 0.35%
- Witan Investment Trust plc (LSE:WTAN) 0.08%
- Alliance Trust 0.07%
- Aberdeen Diversified Income & Growth 0.04%
Tencent's major holdings
The three largest holdings of the Shenzhen-based company are Pinduoduo Inc (NASDAQ:PDD), Sea Ltd (NYSE:SE) and Tencent Music Entertainment Group respectively, according to Whale Wisdom.
Also amongst its 'top 20' holdings are electric vehicle maker Nio Inc and China's Uber equivalent Didi Global Inc.
Further down the pecking order, outside of Chinese holdings, Tencent also partly owns 5% of Activision Blizzard Inc (NASDAQ:ATVI) and 20% of Universal Music Group.
China has been trying to reduce the monopolies of technology industry leaders Tencent and Alibaba Group (NYSE:BABA) since late 2020.
Authorities slapped 98 fines on major internet companies last year.
Tencent and Alibaba own stakes in hundreds of start-ups and publicly listed companies, giving them giant market shares in the internet economy.
China’s tech woes stemmed largely from the concoction of fines issued on companies within the burgeoning sector, Forbes reported, with the two giant e-commerce platforms themselves facing several charges for failing to meet anti-monopoly transaction disclosure laws.
China’s State Administration for Market Regulation on Sunday unveiled a list of 28 breaches of its anti-monopoly law, with some stemming back over 10 years.
Of those, 12 involved Tencent and Alibaba was accused of five, including its equity buy purchase in subsidiary Youku (NYSE:YOKU) Todou last year.
From 2008, any merger deal with “potential monopoly implications” had to submit to regulatory review before continuing.