Chinese social media and video game giant Tencent became more valuable than Facebook on Tuesday as investors sent the company soaring into the top five of the world's biggest firms.
Tencent's Hong Kong-listed shares have doubled in value this year, and on Monday it became the first Asian company with a market capitalisation of half a trillion dollars.
By the end of the trading day on Tuesday, Tencent's outstanding shares were worth a combined 4.08 trillion Hong Kong dollars (US$523 billion), surpassing Facebook's $519 billion.
Despite its stratospheric climb, Tencent is still some way behind the world's most valuable company, Apple, which is currently valued at $873 billion.
Last week, Tencent said profit had grown nearly 70 per cent in the third quarter, when compared with the same period last year, well outpacing expectations. Its accelerating growth has sent its shares shooting higher in recent days.
Critics say many of China's tech companies copy the latest idea seen in the US. That has not been the case for Tencent, which has transformed its WeChat smartphone app into a product wholly unlike other social networking applications seen around the world.
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Tencent profit soars as Chinese tech major wins on smartphone games
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"Tencent is an enterprise that focuses on innovation," said Huang Hai, an associate researcher at the National Academy of Economic Strategy of Chinese Academy of Social Sciences. "Its product ideas are not simple emulations of those of foreign businesses."
But it also has a distinct advantage over some of its western peers: Facebook and Twitter are blocked in China, cutting off a market of up to 1.3 billion people.
The nearly one billion users who flock to Tencent's WeChat app, and older platform QQ, can chat, post photos, play games, transfer money and pay for a variety of services in China. They exchange 38 billion messages each day.
WeChat has revolutionised China's tech industry and even daily life for millions of Chinese.
WeChat's QR codes, which look a lot like a bar code, are ubiquitous in China's shops and restaurants, and even fruit hawkers and some beggars carry around the scannable codes, allowing them to accept mobile payment.
The Wepay service, along with its competitor made by Alibaba, has helped China jump from a cash based society to one at the global forefront of mobile payments.
Even the media and publishing sectors have seen changes to how Chinese consume and pay for content, with millions of WeChat accounts publishing content directly to their followers.
That has rubbed up against Chinese censors, who shut down dozens of accounts publishing the latest titbits of celebrity gossip over the summer.
Another key to Tencent's success has been its top game, the multi-player online battle "Honour of Kings", which has been a smash hit that helped Tencent's revenue from smartphone games surge by 84 per cent in the third quarter.
Tencent's disruption of industries traditionally dominated by the state has also angered a number of behemoths — from the publishing to telecommunications to banking sectors.
These powerful enemies could pose a problem for the tech giant in the future, analysts say.
"Most of its profits are obtained by foreign investors," said Huang of the government research institute.
"The government should face up to this issue and consider the ways to promote the development of entirely national enterprises in the future," he said.
Results
6.30pm Madjani Stakes Rated Conditions (PA) I Dh160,000 I 1,900m I Winner: Mawahib, Tadhg O’Shea (jockey), Eric Lemartinel (trainer)
7.05pm Maiden Dh150,000 I 1,400m I Winner One Season, Antonio Fresu, Satish Seemar
7.40pm: Maiden Dh150,000 I 2,000m I Winner Street Of Dreams, Pat Dobbs, Doug Watson
8.15pm Dubai Creek Listed I Dh250,000 I 1,600m I Winner Heavy Metal, Royston Ffrench, Salem bin Ghadayer
8.50pm The Entisar Listed I Dh250,000 I 2,000m I Winner Etijaah, Dane O’Neill, Doug Watson
9.25pm The Garhoud Listed I Dh250,000 I 1,200m I Winner Muarrab, Dane O’Neill, Ali Rashid Al Raihe
10pm Handicap I Dh160,000 I 1,600m I Winner Sea Skimmer, Patrick Cosgrave, Helal Al Alawi
The biog
Marital status: Separated with two young daughters
Education: Master's degree from American Univeristy of Cairo
Favourite book: That Is How They Defeat Despair by Salwa Aladian
Favourite Motto: Their happiness is your happiness
Goal: For Nefsy to become his legacy long after he is gon
What are the influencer academy modules?
- Mastery of audio-visual content creation.
- Cinematography, shots and movement.
- All aspects of post-production.
- Emerging technologies and VFX with AI and CGI.
- Understanding of marketing objectives and audience engagement.
- Tourism industry knowledge.
- Professional ethics.
Spider-Man: No Way Home
Director: Jon Watts
Stars: Tom Holland, Zendaya, Jacob Batalon
Rating:*****
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Results
6.30pm: Al Maktoum Challenge Round-2 Group 1 (PA) US$75,000 (Dirt) 1,900m
Winner: Ziyadd, Richard Mullen (jockey), Jean de Roualle (trainer).
7.05pm: Al Rashidiya Group 2 (TB) $250,000 (Turf) 1,800m
Winner: Barney Roy, William Buick, Charlie Appleby.
7.40pm: Meydan Cup Listed Handicap (TB) $175,000 (T) 2,810m
Winner: Secret Advisor, Tadhg O’Shea, Charlie Appleby.
8.15pm: Handicap (TB) $175,000 (D) 1,600m
Winner: Plata O Plomo, Carlos Lopez, Susanne Berneklint.
8.50pm: Handicap (TB) $135,000 (T) 1,600m
Winner: Salute The Soldier, Adrie de Vries, Fawzi Nass.
9.25pm: Al Shindagha Sprint Group 3 (TB) $200,000 (D) 1,200m
Winner: Gladiator King, Mickael Barzalona, Satish Seemar.
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
