Bear Hunting in Hong Kong

Bear Hunting in Hong Kong

Hong Kong market and China /Hong Kong tech sector has recently reached bear territory. As a fervent bear hunter, this presents an unparalleled opportunity for potential entry into a foreign market that I am reasonably familiar in, as well as an industry that has great growth potential. The companies that constitute Hong Kong market consist of prominent companies (Tencent, HSBC HK, Bank of China, CK Hutchinson) as well as interesting ones (Alibaba pictures, Want Want).

Hong Kong was recently having a economic boom prior to the emergence of the bear. There was recent IPO of various companies like Xiaomi, a company focused on innovation in assorted areas, from rice-cookers to smartphones and Internet of Things. There were many more smaller companies that were busily raising cash from would-be investors, and not even bothering to fine tune administrative details such as registration for official ISIN. There was also a fervent increase in housing prices in Hong Kong, due to hot money inflows from China, whom are snapping up prime property.

Tencent Holdings - a Prelude

Ten-cent holdings (700HK) has particularly caught my eye.This company often draw parallels to Facebook (Weixin Wechat messaging and payment system), Advertising revenue from its SuperApp and websites, gaming partnerships and distribution of high end games ( Nexon's MapleM, Square Enix) as well as creation of games that was widely acclaimed ( League of Legends, PUBG Player Unknown Battle Grounds and Fortnite, Clash Royale). It is impossible to describe Tencent in a single blog post due to its large conglomerate of businesses , and I will attempt to cover Ten cent gaming division in this post.

I am always captivated by video games and is interested in the potential growth of the video gaming industry. Video gaming exhibit a franchise model often touted by Warren Buffet,  cost little to upkeep, and the logo / music / pictures allows to products and services sold to be automatically sold at a premium due to its intellectual property rights as well as strong branding. As kids of yesteryear transit to adulthood, nostalgia still kicks in and they are now financially equipped to spend considerable amounts on enduring gaming franchises. Even gaming franchises like final fantasy, kingdom hearts and Pokemon, which was originally catered to young children, have their fair share of following by adult gamers. Competitive Pokemon battling is updated by Smogon / computer scientists whom examine gaming mechanics and advanced probability theory, hearthstone has reddit posts based on Poisson distributions and Monte Carlo simulation for yogg sauron, and Disneyland theme parks as well as final fantasy concerts can automatically charge a premium and command a Pricing power that is independent of supply and demand.

Now, theoretically considerations aside, I will explore the video gaming industry from the interviews of an corporate insider standpoint, and see if my hunch in this sector is worth considering.































http://www.tencent.com/attachments/ProductlistofTencent2Q18.pdf

Social and Communication (Wechat)
Social Networks (Anime and Manga, Video, Music, Sports, Live broadcast)

Online Literature (China Literature)
Tencent Cloud
 News

Payments
Weixin Pay
QQ Wallet
Loans (Webank)

Advanced Casual Gaming
Massive Multiplier Open Gaming
Tencent Mobile gaming

Links
https://www.scmp.com/business/markets/article/2163538/hong-kong-stocks-slide-bear-market-wipe-us976-billion-market-cap
http://www.tencent.com/attachments/ProductlistofTencent2Q18.pdf
http://www.tencent.com/en-us/articles/15000721534381804.pdf
http://www.tencent.com/en-us/articles/17000391523362601.pdf
http://www.tencent.com/attachments/ResultsPresentation2Q18.pdf
http://www.tencent.com/attachments/CorporateOverview2Q18.pdf


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