Tencent Surges to Record on Speculation of Shenzhen Stock Link

Tencent Holdings Ltd. soared to a record in Hong Kong as investors speculate a potential link with the the Shenzhen exchange will spur China’s biggest gaming and messaging company higher.

The shares jumped 4.5 percent to HK$171.20, the highest close since its 2004 initial public offering. Trading volumes were about 2.4 times the daily average of the past three months.

Tencent, which reported record earnings last week, surged in 2015 after the successful start of a link between Hong Kong’s equity market and the Shanghai Stock Exchange fueled purchases by mainland investors. Speculation has been building China could announce a start date for a similar arrangement with the Shenzhen bourse of July 1, said Kevin Tam, an analyst at Core Pacific-Yamaichi International Hong Kong Ltd.

“The market is speculatively buying on Shenzhen link today,” Tam said by phone. “People are speculating a start on July 1. Tencent is also digesting better-than-expected first quarter earnings.”

Tencent, which is based in Shenzhen, is in talks to buy a majority stake in gamemaker Supercell Oy from SoftBank Group Corp., the Wall Street Journal has reported.

Supercell would boost sales in games and also Tencent’s advertising business, ICBC International Research Ltd. analyst Yu Jianpeng said by phone. Yu said Tencent is the best investment choice in Hong Kong’s listed Internet sector.

Games are among Tencent’s biggest businesses. Revenue from its Value Added Services unit, which includes online games and messaging, rose 34 percent to 25 billion yuan ($3.8 billion) in the March quarter. The company also owns a stake in Glu Mobile Inc. the San Francisco-based company that has produced smartphone games featuring Kim Kardashian and Katy Perry.

— With assistance by Amy Li, and Amanda Wang

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