It looks like it’s game over

Tencent has been a remarkable performer over the years since it was founded in 1998, building a business of such scale that its market cap was knocking on the door of $1-trillion before the Chinese government piled in with an unprecedented regulatory tightening cycle in 2021 that effectively halved the company’s share price.

A slew of regulations targeted internet platforms and property markets, wiped out the for-profit education sector at a stroke, and made investors around the world take a mighty gulp as they tried to work out whether operating under the whim of the Chinese Communist Party (CCP) meant that China was basically uninvestable.

President Xi Jinping announced a new “common prosperity” agenda that is aiming to promote more equitable and sustainable growth, and he is expected to break with tradition and stay in power for a third term.

This might cause alarm bells to ring for those who have seen what an extended period of power has done to the decision-making abilities of Russian President Vladimir Putin, especially given the hungry glances China has been casting at Taiwan over the years.

Tencent announced lacklustre fourth-quarter earnings, with revenues up a mere 7.9%, and the company has had to shut down its game streaming service, Penguin Esports. Tencent has stakes in Huya and DouYu, the leading streaming services in China.

It had planned to sell Penguin Esports to DouYu, then merge it with Huya to create a dominant player, but the deal was kiboshed by the regulator on competition grounds. So now it’s back to the drawing board.