After three straight years of decline, Chinese tech company Tencent is poised for gains in 2024. The stock is up more than 3% for the year so far, in contrast with a decline of more than 4% in Hong Kong’s main Hang Seng Index. Tencent, largely known for its gaming and social media businesses, is the biggest stock in the index with a market capitalization of more than $350 billion. The first quarter should “mark the trough” in Tencent’s games business, Morgan Stanley equity analyst Gary Yu and a team said in a report on April 14. “We expect games growth to be down 4% YoY (vs cons down 3% YoY) mainly due to soft domestic growth. That said, our previous expectation of 2Q seeing an inflection point remains intact.” The firm is overweight on Tencent shares, with a price target of 400 Hong Kong dollars ($51). That’s more than 30% above where the stock closed Friday. Chinese authorities resumed approvals of Tencent’s games in late 2022 after a freeze of more than a year. When asked in late March about the risk of new restrictions, management said that regulators have made it clear they intend to “provide a healthy environment for growing the industry rather than constraining the industry.” That’s according to a FactSet transcript of an earnings call. Most of Tencent’s gains this year have come after that quarterly earnings report. The company’s other major revenue generators include advertising, financial technology and business services. “Among our [Asia ex-Japan internet] stock coverage, Tencent is our top pick considering its diversified business models and margin expansion story,” Jefferies analysts said in a note on April 17 about their meetings in the last week with European investors. Also helping analysts’ optimism on the stock are Tencent’s share buybacks. Morgan Stanley’s Yu pointed out that Tencent has announced it would repurchase at least $13 billion in 2024 — more than double last year’s buyback program — for a yield of about 5%. The buybacks offset an ongoing sell-down by Prosus of its holdings in the Chinese company to fund its own share repurchase program. Prosus is a Netherlands-based company owned by Naspers, an early investor in Tencent. “Based on Prosus’ current run-rate of share sale in 1Q24, Tencent’s total buyback for 2024 will be around 2 times of Prosus’ share sale,” Charlene Liu, HSBC’s Head of Internet and Gaming Research, Asia Pacific, said in a report on April 16. “Tencent has increased its daily buyback to HKD1bn/day from HKD500m/day since mid-January,” the report said. HSBC has a buy rating on Tencent, with a target price of 385 Hong Kong dollars. The investment firm also expects Tencent’s game business to turn around soon, albeit not until the second half of this year. “While the inability to undertake buybacks during the blackout period [one month before earnings] can weigh on the share price near term, a persistent recovery in the games business and resilient growth from ads, fintech and business services can help to sustain earnings growth supported by improving margin,” the HSBC report said. Tencent is set to release first quarter results on May 14. Chinese internet companies Alibaba and JD.com have also announced share buyback programs this year. “I believe that we’re definitely seeing more mature performances or behavior patterns, if you will, especially for the list[ed] companies to do buybacks, to do dividends,” Grant Pan, CFO of China-based wealth management firm Noah Holdings, told me in an interview Friday. “In the past predominantly it’s a valuation-driven stock market,” he said. “But now I think people are really not just looking for the valuation but [the] actual value of the company. Instead of looking for multiples they’re looking for the earning power.” Pan said that low liquidity in Hong Kong has also affected share prices in that market, but he hopes that can improve with a new CEO. The Hong Kong exchange’s co-COO Bonnie Chan is set to become head of the business in late May. Noah’s clients have also started inquiring more over the last two to three quarters about investments in China, Pan said, noting that prices are nearing a level at which there may be opportunities to buy. — CNBC’s Michael Bloom contributed to this report.
Check out the companies making headlines in midday trading: T-Mobile — Shares pulled back 11% after the company’s wireless subscribers for the first quarter missed Wall Street estimates. T-Mobile reported 495,000 postpaid phone additions in the first-quarter, while analysts polled by StreetAccount were looking for 504,000. Alphabet — The Google parent company gained about 2% on the heels of better-than-expected first-quarter results . Alphabet reported $2.81 per share on revenue of $90.23 billion, while analysts polled by LSEG forecast $2.01 in earnings per share and $89.12 billion in revenue. Skechers — Shares fell 4.8% after the footwear maker posted weaker-than-expected revenue for the first quarter and withdrew its 2025 guidance due to ” macroeconomic uncertainty stemming from global trade policies .” The company’s earnings for the quarter came in above analysts’ estimates, however. Gilead Sciences — The biopharmaceutical stock fell 2.5% after first-quarter revenue came in at $6.67 billion, missing the consensus forecast of $6.81 billion from analysts polled by LSEG. However, the company earned $1.81 per share, excluding items, in the quarter, beating Wall Street’s estimate of $1.79 a share. Saia — Shares of the shipping company fell 31% after first-quarter results missed estimates and showed a slowdown in March. Saia reported $1.86 in earnings per share on $787.6 million in revenue. Analysts surveyed by FactSet were expecting $2.76 in earnings per share on $812.8 million in revenue. BMO Capital Markets downgraded the stock to market perform from outperform and said the issues were “company specific.” Intel — The chipmaker declined 7% after Intel’s current quarter missed investors’ expectations. Intel forecast revenue in the June quarter of $11.8 billion at the midpoint, while consensus forecasts called for $12.82 billion, per LSEG. Management anticipates earnings will break even. Intel also announced plans to reduce both its operational and capital expenses. Boston Beer — Shares of the Samuel Adams brewer were more than 1% higher after better-than-expected first-quarter results. Boston Beer notched earnings per share of $2.16 on revenue of $453.9 million, while analysts polled by FactSet were looking for 56 cents per share on revenue of $435.6 million. Boston Beer cautioned that tariffs could hurt full-year earnings. Tesla — The Elon Musk-helmed electric vehicle company surged 10%. Shares have advanced more than 17% this week as the broader market tries to recover from a steep sell-off for much of April. — CNBC’s Jesse Pound, Alex Harring and Sean Conlon contributed reporting. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
Check out the companies making headlines before the bell: Meta Platforms — The Facebook and Instagram parent jumped about 3%. Meta cut staff in its Reality Labs division, CNBC reported. Alphabet — The Google and YouTube owner climbed more than 4% after first-quarter results topped Wall Street expectations. Alphabet earned $2.81 per share on $90.23 billion in revenue for the quarter, while analysts surveyed by LSEG had estimated $2.01 per share and $89.12 billion in revenue. T-Mobile — Shares of the telecommunications company fell 5.5% after it reported fewer first-quarter wireless phone subscribers than the Street expected, seeing 495,000 postpaid phone additions versus analysts’ call for 504,000, according to StreetAccount. Earnings and revenue for the first quarter topped Street estimates. Intel — The chipmaker fell 7.2% after the outlook for the current quarter disappointed investors. Intel guided for revenue in the June quarter to come in at $11.8 billion at the midpoint, less than consensus calls for $12.82 billion, according to LSEG. Management anticipates earnings will break even. Intel also announced plans to reduce its operational and capital expenses. Gilead Sciences — The biopharmaceutical stock slid 3.9% after posting first-quarter revenue of $6.67 billion, missing the consensus estimate of $6.81 billion from analysts polled by LSEG. Gilead earned $1.81 per share, excluding items, in the quarter, while Wall Street penciled in $1.79. Skechers — The footwear maker slumped 6% after reporting lower-than-expected first-quarter revenue and withdrew its 2025 forward financial forecasts on account of ” macroeconomic uncertainty stemming from global trade policies .” Skechers’ bottom-line results came in above analysts’ forecasts. Charles Schwab — The financial services provider advanced 1.4% after Goldman Sachs upgraded shares to buy from neutral, calling Schwab a resilient growth stock amid an uncertain backdrop. Hasbro — The toy company rose about 1% one day after soaring 15%. Citigroup raised its investment opinion to buy from neutral, saying Hasbro’s stronger-than-expected Wizards of the Coast business outweighs any uncertainty stemming from tariff policy, according to analyst James Hardiman. Boston Beer — Shares of the Samuel Adams brewer rose nearly 3% after first-quarter results beat expectations. Boston Beer generated $2.16 in earnings per share on $453.9 million of revenue, while analysts surveyed by FactSet looked for 56 cents per share on $435.6 million in revenue. Boston Beer warned in its outlook that tariffs could hurt full-year earnings. — CNBC’s Alex Harring and Jesse Pound contributed reporting. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
“I think having that professionally managed portfolio is really beneficial to clients,” Coyne told CNBC’s “ETF Edge” this week. “We’re seeing just… greater volatility [and] uncertainty across both the equity and fixed income markets.“
According to Coyne, the T. Rowe Price Capital Appreciation Equity ETF suits investors who are looking for long-term growth.
“The objective of the fund is to outperform the S&P 500 with lower volatility and greater tax efficiency,” he said. “It’s also a more concentrated portfolio, typically holding around a hundred names.”
The T. Rowe Price Capital Appreciation Equity ETF is down about 5% so far this year while the S&P 500 is off about 7% However, the ETF is up close to 8% over the past year — roughly identical to the S&P 500’s performance.
Coyne notes the T. Rowe Price U.S. Equity Research ETF follows a similar strategy, but with a heavier weighting in top tech stocks.
“This is more of a large-cap growth product [T Rowe Price U.S. Equity Research ETF],” he said. “There are components of characteristics of both passive and active here. This fund is actually managed by our North American directors of research. So again, strong fundamental research is going into the stock selection.”
Both the T. Rowe Price U.S. Equity Research ETF and S&P 500 are down around 7% since the beginning of the year. Meanwhile, the fund is up almost 9% over the past year. That’s less than one percent better than the S&P 500’s performance.
T. Rowe Price U.S. Equity Research ETF vs. S&P 500
‘Some form of bear market’
Strategas Securities’ Todd Sohn thinks investment demand for active managers will continue to be strong.
“This is the type of the environment where it [active management] can actually shine,” the firm’s senior ETF and technical strategist said. “We are in some form of bear market. This is where the active manager really can come into hand and offer their solution they are doing right.”