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Tencent Music Entertainment Group (TME) stock plunged in the current market trading session: here’s why

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Tencent Music Entertainment Group (TME) stock recently traded at $19.65 which is a 2.52% downward movement. The TME stock previously closed at $20.16.

The US-China tension recently caused the Exchange Trade Funds to slump especially the ones that leaned towards the technology stocks. This is because of the new SEC policies. This has also affected TME stock.

Insight on Tencent Music Entertainment Group’s business background

Tencent Music Entertainment Group (TME) is an entertainment company that creates music streaming services for the market in China. It is operating in China’s most popular and innovative music streaming apps. This includes QQ Music, Kuwo Music, WeSing and Kugou Music. TME stock’s operational platform also comprises of online karaoke, online music and live streaming services enabling fans to engage with music and have an elevated role in the music platform.

Releasing Stars and Wishes album on World Autism Awareness Day

Tencent Music has recently elevated this role of music in people’s life launching a collaborative charity album on 2nd April 2021. Tencent collaborated with pop singer and TME Music Care Ambassador Chen Linong as well as a talented group of autistic children. There is a very encouraging association of autistic children with stars in China. This is why the album has been dubbed Stars and Wishes and was launched on the World Autism Awareness Day.

TME stock has been releasing charity albums for four consecutive years since 2017 to 2020, for raising awareness and educational support for special needs groups. It also raises this awareness through the platform it knows the best and that is music; providing music therapy to show how music can heal and improve mental health.

Announcement of $1 billion repurchase program

As positive this news is for public image, media popularity, and even TME stock performance to an extent but that is not all Tencent Music has recently done. TME announced on 28th March 2021, that it had authorized a $1 billion share repurchase program. This program will have a time duration of 12 month. These $1 billion shares will be Class A ordinary shares in the form of American Depositary shares to be repurchased. This indicates that the Tencent Music’s Board is very confident and bold about its business outlook for the long term strategy.

So how does the recent development project TME stock’s outlook?

The repurchase program is a strong step taken by Tencent Music Group to create hype for TME stock in the long-term and especially to counter the fear of slumps in the ETF funds due to China-US tensions. In the last week of March, there was fear looming that SEC’s new adopted law called Holding Foreign Companies Accountable Act would delist Chinese Tech stocks. Due to which in the seven day period leading up to 26th March Friday closing, TME stock fell by 33.92%.

Harding Loevner released its “International Equity” Q4 2020 investor letter on 1st April. They mentioned Tencent Music (TME) and stated it is being involved with the state-regulated Chinese banking system via their payment platforms. This can potentially cause Tencent to be entrenched in the vested interests of politically powerful and would then have to sign up their business models in the process.

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