Tencent Music is planning to buy back up to $1 billion worth of shares.
On Sunday, Tencent Music Entertainment Group announced its repurchase plan worth $1 billion. This is the company’s biggest offer.
Tencent Music announced it days after the US securities regulator started taking steps to implement stricter financial oversight of companies owned by foreigners.
The SEC said that it would begin enforcing the Trump-era Holding Foreign Companies Accountable Act. Violating the Act could result in delisting the company from the US stock markets.
Tencent Music Suffered a Huge Drop
After the announcement of SEC, the China-based company suffered a significant drop in shares. The buyback will start on Monday. It’ll take place in the next 12 months.
Tencent Music is part of Tencent, a Chinese technology company. It runs streaming apps and services. Currently, it’s listed on the NY Stock Exchange.
It lost a third of its value after a sell-off in Chinese tech stocks. In Hong Kong, many dual-listed Chinese tech shares trading were affected because of fears that some companies could be removed in the US.
As a result, Hong Kong shares of these Chinese tech stocks listed in the US fell sharply. For instance, Alibaba shares were down by more than 4%. Baidu also tanked, as well as JD.com and NetEase.
Tencent Music is one of the companies that needs auditing by a US watchdog. It requires submitting certain documents to establish that it’s not owned by a government entity in its foreign jurisdiction.
This streaming app and services company is also facing delisting at home, along with other Chinese tech companies. Beijing is looking to control the power of tech giants. It’s also establishing new rules in several areas, not just in eCommerce.
The crackdown started with the empire of Jack Ma. It also affected Ant Group. But experts are seeing signs that China is targeting other companies.
This month, Tencent founder met with Chinese antitrust officials. The company is only listed in Hong Kong. But after the stricter regulations have been imposed, its shares fell over 2%.
On Friday, Archegos Capital Management was ordered to liquidate positions in some major Chinese tech names.
Tencent Music Buyback Class A Ordinary Shares
In a statement, Tencent Music will buyback Class A ordinary shares through American depositary shares.
The company stated that the share buyback program is an indication that the board is confident in the company’s business outlook.
It’s part of its long-term strategy. It believes that it’ll benefit Tencent Music while offering value to its shareholders.
In China, tech companies are always in the crosshairs of the nation’s regulators. They set antitrust rules to ensure that these firms are in check.
Beijing wants its new regulations will balance its plan to be a worldwide tech leader.
China’s tech sector expanded largely. Regulators are stepping in and they are boosting their efforts.
Beijing wants Chinese tech companies to represent the nation’s successful modernization. But it’s struggled to find a way to fit them into the socialist market economy.