Tencent off-loads share in gaming company

​​Gaming and social media giant Tencent has off-loaded $3 billion worth of shares in the Singapore-based gaming and ecommerce firm Sea on Wednesday amid an ongoing regulatory scourge on gaming and anticompetitive behavior.

• Sea, which owns the famous ecommerce company Shopee, is one of Southeast Asia’s most valuable startups, with a market value of $124 billion.
• Tencent purchased a 21.3% stake in 2017, down to 18.7% after the share sale. The company claimed that the sale will be used to fund “other investments and social initiatives.”
• The owner of the super app WeChat also has video game studios and has collaborated with Sea on video game distribution in Southeast Asia for years.

Tencent’s move comes just days after the company divested $16.4 billion worth of shares in ecommerce firm JD.com, distributing it in the form of a special dividend to shareholders.

• The selling spree is a reminder of just how interconnected China’s internet economy is. China’s tech stocks fell again on Wednesday on the back of the news given Tencent’s stake into many players in the industry.
• Tencent shares were down 4.3% in Hong Kong following the news. It has fallen about 21% over the past 12 months.
• Tencent still holds sizable stakes in other big internet players such as food-delivery giant Meituan and group-buying behemoth Pinduoduo, sparking concerns that more selloffs are around the corner.

What’s happening: Tencent is aligning its portfolio to match the priorities of Beijing’s “common prosperity” and sustainability push. We can expect big internet giants to divest away from its stakes in other big internet firms, and into social causes like the “common prosperity” fund and other hard-tech products like semiconductors.