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Tencent shares down on JD com stock purchase

Article By: ,  Financial Analyst
March 10, 2014 11:15 AM

Shares in Tencent Holdings fell today (March 10th) after the company confirmed it has bought a major stake in JD.com.

The company is trying to build a greater share of the ecommerce market and as a result has purchased a 15 per cent stake in the online retailer.

Tencent Holdings is Asia's biggest internet company and the firm will pay about $215 million (£128 million) for the stake. JD.com is reported to be preparing for an initial public offering in the US later in the year, which is expected to raise $1.5 billion.

"We hope to enhance our ability to provide high quality and enjoyable shopping experience to a broader and growing user base while strengthening our direct sales and marketplace businesses on mobile and internet," JD.com chairman Richard Liu said in a statement.

Ecommerce growth

China's ecommerce sector has exploded over the course of the last few years as the country's growing middle class looks to the internet to buy luxury items. Tencent Holdings is one of the many firms looking to make the most of this rapidly expanding market and the purchase of the JD.com stake is another sign the company is determined to be the dominant player in this area.

President of Tencent Martin Lau stated that the company is pleased to be combining its thriving ecommerce business with the knowledge and expertise built up in recent years by JD.com.

He said: "Our strategic partnership with JD will not only extend our presence in the fast-growing physical goods ecommerce market, but also allow us to better develop our enabling services such as payment, public accounts and performance-based advertising network to create a more  prosperous ecosystem for overall ecommerce activities on our platforms."

The share price of Tencent fell by almost two per cent over the course of today's trading session on the back of the news of the JD.com investment. Stocks closed for the day at 618.00, a fall of 12.50 points over the session.

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