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Tencent Music jumps in New York debut as investors pour in despite global tech wobbles

  • Tencent Music’s IPO is latest in a series of Chinese companies going to market this year
  • This is despite gathering storm clouds and volatility related to US-China trade war

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Tencent Music Entertainment operates music streaming apps QQ Music, Kugou Music and Kuwo Music, and karaoke app WeSing. Photo: HANDOUT

Tencent Music Entertainment Group, the music streaming spin-off of China’s biggest social network operator Tencent Holdings, rose in its trading debut on the New York Stock Exchange on Wednesday, as investors shrugged off a recent wobble for global tech stocks amid a US-China trade war and slowing growth.

Shares of the Chinese music streaming service traded as high as US$14.75 in first 10 minutes of trading, before easing slightly to close up 7.7 per cent at US$14 as investors grabbed the opportunity to take a slice of the fast-growing music streaming industry.

The market close gave Tencent Music a market capitalisation of about US$22.9 billion, on par with Swedish peer Spotify Technology’s current valuation of US$23.1 billion. Spotify is an investor in the Chinese company.

Tencent Music’s IPO is the latest in a series of Chinese companies going to market this year despite gathering storm clouds and volatility related to the US-China trade spat. Chinese smartphone maker Xiaomi, touted as one of this year’s hottest Hong Kong IPOs, had a bumpy ride and fell below its initial price while Chinese food delivery giant Meituan, which went public in September, is currently a quarter lower than its debut price.

Despite the uncertain macro environment, many analysts are positive on Tencent Music's diversified monetisation model compared with the concentration of revenue at Spotify from subscription and ads.

Tencent Music operates music streaming app Kugou Music, Kuwo Music and QQ Music, which works more like Spotify, and WeSing, a karaoke music app. Social entertainment services, which include virtual gifting revenues from online karaoke and live-streaming services, accounted for 70 per cent of total revenue in the first half of 2018 at Tencent Music. Music streaming revenue accounted for the rest.

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