Date
12 December 2017
Tencent has surged almost 120 per cent year to date and could possibly go higher based on the share price momentum. Photo: Bloomberg
Tencent has surged almost 120 per cent year to date and could possibly go higher based on the share price momentum. Photo: Bloomberg

Tencent or home?

A popular local saying among netizens goes like this: how can one not feel bad about not owning a home or shares in Tencent Holdings.

That is of course very true when the Hang Seng Index broke 30,000 on Wednesday, fueled by none other than Tencent.

And because most people made money, they would put the money back into the property market – and that is why we contine to have sky-high home prices.

Anyone who bought the shares of the Shenzhen internet giant, or residential property in the past decade, would almost certainly be making a lot of money – if they held till now.

For one thing, Tencent has surged almost 120 per cent year to date and could possibly go higher based on the share price momentum. Tencent seldom let down its investors in terms of profits, strategy and execution.

On Tuesday, the company founded by Pony Ma surpassed Facebook to become the fifth member of the US$500 billion club, behind Apple, Microsoft, Google and Amazon.

One should note that Tencent is a real star because it ran much faster than its rivals – as well as other sectors such as property.

Buying property sounds a much better deal than buying conglomerates, most of whom trailed the 35 per cent year-to-date performance of the blue-chip index.

Think of an investor with exposure to Li Ka-shing companies and you will get the picture.

Last week, two units of Mount Nicholson, a Peak development by Wheelock Properties and Nan Fung Development, was sold for HK$1.16 billion, or above HK$131,000 per square foot, breaking all apartment records in Hong Kong, Asia and possibly the rest of the world.

Now the million-dollar question is: which is a better bet in the coming years?

Assuming you have HK$1 million, you can ill-afford – I am sorry to say – a subsidized 400 square foot flat at Tseung Kwan at HK$3.6 million. But you will double your investment if the flat surges to HK$4.6 million thanks to the mortgage gearing effect.

Now if you put the same money on Tencent, which would entitle you 2,300 shares at HK$430, you will get a 100 per cent return if the share price shoots up to HK$860.

By then, Tencent would have topped Apple as the world’s biggest stock in market capitalisation.

Whether it will be quicker to see another 30 per cent surge in the home market, or when Tencent rallies past Apple is really a judgment call.

What I know for now is the two assets are hot and expensive – and I can share the sad feeling for not owning them.

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BK/RA

EJ Insight writer

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