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Have Tencent Shares Bottomed Out After Losing $150B This Year?



Tencent [TCEHY] investors have had a rough year so far as shares of China’s internet giant have declined close to 30% this year. The stock has declined due to the trade wars between China and the United States, declining margins and gaming regulations.

China is the biggest gaming market in the world and Tencent is the largest gaming company. So are these fears overblown? Have Tencent shares bottomed out? Is there significant upside potential for Tencent investors?

Gaming regulations

Chinese government departments approve video game licenses. However, certain departments are in a restructuring phase according to this Bloomberg report. This has led to a temporary freeze in gaming approvals.

The report states that while the National Radio and TV Administration has not issued licenses for 4 months now, the Ministry of Culture and Tourism has made registering games difficult.

Government interference and regulations are a part and parcel of the Chinese markets. There is always a potential risk of uncertainty for investors here. Tencent is yet to receive the necessary approvals for the new genre of gaming that has taken the world by storm – the battle royale.

Games such as Fortnite and PUBG have gained immense popularity and impacted stocks of top gaming companies such as Activision Blizzard [ATVI] and Electronic Arts [EA]. Further, Tencent was asked to recall one of its highly anticipated games – Monster Hunter: World just a few days after it debuted.

The game was pulled out after people raised objections to its content. Tencent is not concerned over this delay and expects the regulatory issues to be resolved quickly.

Trade war fears

The ongoing trade wars between China and the United States have driven several Chinese and domestic stocks lower. The two governments have been battling out since the start of 2018 and this is unlikely to abate in the near future.

However, such a reaction to the trade wars does not make sense, especially for Tencent as it generates almost 96% of revenue from domestic markets.

Declining margins

In Q2 2018, Tencent’s operating profits rose 11% year-over-year driven by a 30% rise in sales. However, the company’s operating margin fell to 30% from 35%. Profit margins were impacted due to the ongoing gaming ban. Tencent is unable to monetize two of its key video games.

The Chinese government is also increasing regulations on digital payment products.

Is Tencent’s growth story over?

The answer is NO. Despite these headwinds analysts expect Tencent’s sales to rise 29% to a whopping $78B in 2020. Tencent also owns China’s most popular messaging app known as WeChat. This is similar to WhatsApp and has over a billion users.

Its growing ecosystem of Mini Programs (these are apps that are a part of the core application) makes the WeChat platform more powerful. Mini-programs include a scan-to-buy function used by retailers, a pre-ordering restaurant app and a transport payment solution.

WeChat also has a digital payment system known as WeChat Pay and can be accessed by third-party apps as well as physical retail stores.

Once the regulatory issues are sorted, Tencent shares will continue to move higher driven by a growing gaming market. Don’t forget Tencent has generated absolute returns of a monstrous 34000% since 2004.


INFOGRAPHIC: How To Invest Your Money (In 8 Simple Steps)



Plenty of savers are making do with low rates of return on their deposits—almost eroding the value of their savings. Here’s a guide on how you should invest your money and gain some great returns off it.

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Stock Trading: How to Choose the Best Online Brokers



Stock trading can be a risky business but done right it is an extremely lucrative investment option which yields excellent returns. It is true that trading is quite intimidating for someone who is new to the market and its ways which gives rise to the need for a good stock broker who can handle the job and ensure that the client gets the best returns possible for the money he or she is investing. But as a new investor it is absolutely important that you choose a very good trading broker. Here are some tips that will help you make that choice better.

Understand your trading needs

Before you even look into the services of a trading broker, it is essential that you are aware of your goals and needs from your stock trading. Firstly, prioritise your investment value, short term and long-term goal, and time that you are willing to spend on your trading in order to figure out where you stand. Now, narrow down on the specific kinds of stock exchange that you are looking into. With the wide variety of options available that you can choose from, it is important to narrow down to the specific field or fields and finally look for brokers who suit your specific needs.

Have a clear talk about trading fees

It is important to have a clear-cut discussion on brokerage fee and commissions that your broker will charge you. Ask about the charges per transaction, basic account charges, account minimums and even reimbursements if and when you choose to part ways so that you can have a proper idea about how much you are about to fork out for your trading. It is a good idea to have the talk beforehand so that you do not get into an arrangement which later becomes financially burdensome for you.

Look up reviews on the broker

You would not buy a new product without checking what its previous users have to say, right? Similarly, look up your prospective brokers No matter how promising or lucrative a broker seems with the terms, make sure you check the reviews by InvestinGoal to ensure that you are actually getting a good deal and not being sweet talked into not a good broker or even worse, being conned of your money.

Ask your questions

Do not be afraid to ask whatever questions that come to your mind before you make a deal. This will help you understand your trading better and thus, to get the absolute best out of your investment. It will also help you uncover any hidden charges, non transparent clauses as well that might have later hindered the desirable growth of your stock.

Give a test run

Ask the broker if you can give a test run of your account, and his technology before you actually invest your hard earned money. Many brokers allow you to create a free account which you can use to test their platform and check out user friendliness, ease of trading, quality of tools etc and thus, make an educated decision.

Getting the right broker is definitely one step towards a good stock trading investment. Therefore, it is very important that you take utmost care in picking the very best broker for your trading needs.

This article originally appeared on ValueWalk. Follow ValueWalk on Twitter, Instagram and Facebook.

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3 Simple Steps To Build Your Investment Portfolio



If you’re starting out with planning your investments, chalking out your goals and how you’d like to achieve them is incredibly important. You’ll need to understand what kind of assets you’d like to invest in–be it exotic instruments like private equity or the tried and tested ones like the treasury bonds, ETFs and stocks–and invest right. Here are three key strategies to build your portfolio:

1. Building Wealth Is All About Thinking Rationally (And Smart)

Having the right mindset can play a huge role in how you build your investments. It’s simply not just about strategy. To ditch following the latest fad in the market, you need to be responsible and have a sense of social indifference–coupled with confidence and patience.

2. Invest Like A Cheapskate

If you’re pumping in $150,000 as investment, on which you incur 1% as fees, look out for ways through which you can cut them down.

If you were to cut costs by a little more than a half, that’s saving you at least $1,120 in fees every year. But that’s not it–when this saving is compounded every year, that 1% fee can tally up to a million (if saved, could win you your big ticket to becoming a millionaire!)

3. The KISS (Keep It Simple, Silly) Rule

Funnily enough, most of us think investing your way through millions demands extensive knowledge of financial instruments or strategies. Surprisingly, it’s the simplest of assets that gave the biggest investors their biggest wins. Many successful investors highlight their success to stocks, bonds and other popular alternative investments, patiently held over time.

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