Tencent likely to cut investment portfolio further after Meituan and JD divestments amid Beijing scrutiny, analysts say

The investment empire of Tencent Holdings, which once occupied “half of the rivers and mountains” of China’s internet landscape, is likely to shrink further after the divestment of its stakes in on-demand services giant Meituan and e-commerce platform JD.com, analysts say.

The Shenzhen-based company, which runs the world’s biggest video gaming business by revenue and China’s largest social media platform, said on Wednesday that it would give away 958.1 million shares in Meituan, a stake worth HK$159.4 billion (US$20.4 billion), as dividends to its shareholders.

The move came three months after Tencent denied media reports that it was even considering divesting its stake in Meituan. It follows the decision in 2021 to give away stock in e-commerce platform JD.com worth US$16 billion to shareholders.

Senior Tencent executives have framed the divestments as a savvy move to cash in on hefty returns, but clearly the divestments also come when Beijing has made its intentions clear about the “irrational expansion of capital” and curbed the influence of Big Tech. That is why analysts expect further stake sales.

The changed regulatory environment is likely the main reason behind the Meituan divestment, said Shawn Yang, managing director at consultancy Blue Lotus. Yang added that more disbursements could follow, with some bigger listed companies, such as Pinduoduo, being possible targets.