Tencent: What’s next after rising 4%+?

After the 1Q21 result announcement, the market welcomed stable growth results and has eased tension on regulatory risk. Together with index weighting reduction after HSI constituents changes, Tencent share price has stablised and showed 250MA has a great support. CNH appreciation has fueled investors’ interest in buying RMB denominated assets and Tencent will be a key beneficiary. Our study showed that Tencent should deliver positive price performance in the next 30 trading days despite near-term price correction.

Tencent: 13 times to rise 4%+ while under 50MA

On 25th May, Tencent share price rose 4.2%. Is it a sign of bottom? How will Tencent price perform in the future? Here is the summary of Tencent price performance after 4%+ rise. when the share price was below 50MA.

From 2018 to 2021 (up to May), there are 13 times that Tenccent share price was up 4%+ on one single trading day while price was below 50MA. Most cases happened in 2018, zero in 2019 and 4 times in 2020. However, in the first 5 months of 2021, it happened twice already.

In 8 out of 13 cases, Tencent share price rose less than 1% or fell on the next trading day. However, there are two cases that Tencent’s price rose 4%+ for 2 or more consecutive days. But both cases were in 2018. Thus, in the near-term, Tencent price correction is likely in the near-term.

Finally, we have studied long-term price performance (next 30 trading days) of Tencent after 4%+ price on one single day. After rising 4%+, in the 6 out of 9 cases, Tencent showed positive price performance in the next 30 trading days (N30D). And in 4 out of 6 cases, Tencent N30D price rose more than 10%. Thus, in the next 30 trading days, Tencent price would deliver positive performance after near-term correction.

After the 1Q21 result announcement, the market welcomed stable growth results and has eased tension on regulatory risk. Together with index weighting reduction after HSI constituents changes, Tencent share price has stablised and showed 250MA has a great support. CNH appreciation has fueled investors’ interest in buying RMB denominated assets and Tencent will be a key beneficiary.