As expectations for robust earnings growth push their share prices to record highs, Tencent Holdings Ltd and Samsung Electronics Co Ltd are racing to be crowned Asia's most valuable company.
While rivals Apple Inc and Alibaba have struggled, both the companies have been made the world's best performing large-cap tech stocks by gaining a third this year. This also highlights the nimble feet of these Asian firms in thriving.
"These companies can grow earnings despite weaker global growth. The operating fundamentals of the Chinese internet sector particularly have surprised positively in the most recent quarterly results," said Andrew Gillan, head of Asia ex-Japan equities at fund managing firm Henderson Global Investors, which is overweight on Asian technology firms.
Some investors caution the firms are vulnerable to rapid swings in sentiment on any sign of slowing momentum, even as many investors remain upbeat about Samsung and Tencent. Compared to the broader market this year and the Asia tech sector, Samsung and Tencent have been more volatile this year.
Samsung said earlier this week that even while its second-half profits could still take a hit if production shortfalls are not fixed and a recovery in components demand fails to eventuate, it said that sales of its latest flagship smartphone were out-stripping supply.
Due to seasonal factors in the consumer electronics business and competitive pressures, Samsung’s profit margins might narrow in the second half, warned Moody’s Investor Service.
According to Nomura the market expectations that are driving shares higher are themselves a risk for Tencent. The bank warned that new products or business models from competitors, a faster-than-expected slowdown in personal computer game revenue and aggressive spending could weigh on earnings.
Surging to all-time highs, Since Thursday last week, Samsung and Tencent have added about $30 billion in market value. While Samsung is now worth $239 billion, sitting at a value that is only 4 percent smaller than the most valuable Asian firm, China Mobile, Tencent is valued at $249 billion.
Thomson Reuters data shows that while Samsung is the 17th-largest company by market value in the world, Tencent is now the world's 12th-biggest company. According to a PricewaterhouseCoopers ranking released March 31, that's up from Nos. 33 and 26 respectively just five months ago.
While Apple has gained 3 percent amid concern about weak sales in China, Samsung shares' have significantly outperformed Apple's and has leapt 50 percent over the past year.
According to Thomson Reuters data, although Samsung is still worth less than half the $586 billion Apple, the gap between Samsung's price-to-earnings ratio of 12.4 and Apple's 12.7 is now the narrowest since late 2011.
After years of struggle in its smartphone business which left investors impatient for higher returns, there has been a growth in Samsung's share price.
Tencent is significantly more expensive than Samsung. Closing in on Facebook's 59, the Chinese internet firm traded at 46.8 times earnings. The Chinese company’s popular WeChat and Weixin messaging apps in China saw active monthly user numbers jump 34 percent in the second quarter.
(Source:www.reuters.com)
While rivals Apple Inc and Alibaba have struggled, both the companies have been made the world's best performing large-cap tech stocks by gaining a third this year. This also highlights the nimble feet of these Asian firms in thriving.
"These companies can grow earnings despite weaker global growth. The operating fundamentals of the Chinese internet sector particularly have surprised positively in the most recent quarterly results," said Andrew Gillan, head of Asia ex-Japan equities at fund managing firm Henderson Global Investors, which is overweight on Asian technology firms.
Some investors caution the firms are vulnerable to rapid swings in sentiment on any sign of slowing momentum, even as many investors remain upbeat about Samsung and Tencent. Compared to the broader market this year and the Asia tech sector, Samsung and Tencent have been more volatile this year.
Samsung said earlier this week that even while its second-half profits could still take a hit if production shortfalls are not fixed and a recovery in components demand fails to eventuate, it said that sales of its latest flagship smartphone were out-stripping supply.
Due to seasonal factors in the consumer electronics business and competitive pressures, Samsung’s profit margins might narrow in the second half, warned Moody’s Investor Service.
According to Nomura the market expectations that are driving shares higher are themselves a risk for Tencent. The bank warned that new products or business models from competitors, a faster-than-expected slowdown in personal computer game revenue and aggressive spending could weigh on earnings.
Surging to all-time highs, Since Thursday last week, Samsung and Tencent have added about $30 billion in market value. While Samsung is now worth $239 billion, sitting at a value that is only 4 percent smaller than the most valuable Asian firm, China Mobile, Tencent is valued at $249 billion.
Thomson Reuters data shows that while Samsung is the 17th-largest company by market value in the world, Tencent is now the world's 12th-biggest company. According to a PricewaterhouseCoopers ranking released March 31, that's up from Nos. 33 and 26 respectively just five months ago.
While Apple has gained 3 percent amid concern about weak sales in China, Samsung shares' have significantly outperformed Apple's and has leapt 50 percent over the past year.
According to Thomson Reuters data, although Samsung is still worth less than half the $586 billion Apple, the gap between Samsung's price-to-earnings ratio of 12.4 and Apple's 12.7 is now the narrowest since late 2011.
After years of struggle in its smartphone business which left investors impatient for higher returns, there has been a growth in Samsung's share price.
Tencent is significantly more expensive than Samsung. Closing in on Facebook's 59, the Chinese internet firm traded at 46.8 times earnings. The Chinese company’s popular WeChat and Weixin messaging apps in China saw active monthly user numbers jump 34 percent in the second quarter.
(Source:www.reuters.com)
