This Chinese Internet giant is creating interesting alliances—from the typical mobile entertainment segment to smart cars to music promotions.
Tencent Holdings (TCEHY)
from Cabot China & Emerging Markets Report
Something interesting has happened to the PowerShares Golden Dragon Halter USX China ETF (PGJ) in the past few weeks. The Golden Dragon started a choppy uptrend after it hit its December 16 low, working its way to 29.47 on February 17. The correction that followed reached a low of 27.18 on March 13. But since that day, PGJ has been in a strong uptrend, reaching its highest level since last November. Much of this three-week rally is attributable to the common impression that the Chinese government is about to institute measures to boost the Chinese economy, including interest rate cuts and lowered restrictions on real-estate investments. Whatever the reason, it does strengthen the buy signal we’ve received from the Cabot Emerging Markets Timer.
Tencent Holdings (TCEHY) has performed nicely since its earnings announcement in March, closing above 19 for the first time yesterday, and pushing higher today. Tencent Holdings has been active recently, announcing 11 new mobile games and one new PC game, the first installment of a planned 60 mobile game releases this year. The company has also announced a new data management platform that will be released in a joint venture with nine partners. We’ll stick with our recommendation to buy a half position; try to get in on a pullback of a half a point. BUY A HALF.
ID Editor’s note: The China/EM portfolio is intended to have ten equal-dollar positions. We recommend taking half a position, or 5% of the amount allocated to emerging markets exposure.
Paul Goodwin, Cabot China & Emerging Markets Report, www.cabot.net, 978-745-5532, April 2, 2015