Analysis: Tencent and Alibaba, whose stocks have dropped 60% and 65% respectively since February 2021, have lost more market value than any other stock globally
Just 18 months ago, Tencent Holdings Ltd. was on the cusp of becoming Asia's second trillion-dollar company … Tweets: @technology Tweets: @technology : Next week, Tencent will seek to assure investors about its outlook during second-quarter results. They won't be easy to convince https://www.bloomberg.com/...
Context & Ripple Effects
This is the endpoint of an arc the desk has tracked for years: Tencent's 2018 slide erased $143B as global investors first turned wary of big-tech growth pricing, then China's 2021 crackdown stripped a combined $823B off the sector, with Tencent, Alibaba, and Kuaishou the biggest losers.
By October 2022 the damage was formalized — Tencent lost its crown as China's most valuable company, down $623B, more than any other firm globally. This analysis lands mid-crisis, just ahead of Tencent's second-quarter results, months before the ~95% and ~85% rebounds that followed the crackdown's relaxation.
First-order effects
- Tencent goes into next week's second-quarter results needing to convince investors already burned by a 60% drawdown that the outlook justifies staying invested.
- Alibaba's 65% decline puts the two firms together as the largest value destroyers of any stocks worldwide, forcing global funds to resize their China platform allocations.
Second-order effects
- The repricing drags the whole listed cohort with it — Kuaishou was among the biggest losers in the same crackdown wave, so portfolio managers cutting Tencent and Alibaba weightings pull down the sector's remaining names.
- With Tencent dethroned domestically after shedding $623B, China's valuation hierarchy resets around whichever platform regulators leave untouched, redirecting investor attention within the local market.
Third-order effects
- Valuations are now driven by policy rather than earnings: the same shares that fell 60–65% under crackdown pressure later rebounded ~95% and ~85% once enforcement eased, making Chinese platforms a regulatory-cycle trade.
- The wariness of big-tech growth pricing first visible in Tencent's 2018 slide hardens into a structural discount on platform stocks anywhere regulation can reprice them overnight.
The trend: Chinese platform stocks are trading as regulatory-cycle assets, with policy shifts rather than quarterly results setting the ceiling and floor on their valuations.