China ETF News: Tencent Results In Line As Free Cash Flow Increases 6X
Key News
Asian equities were mostly higher overnight as Korea and Pakistan outperformed, while Hong Kong and Vietnam underperformed, though still managing gains.
Mainland China outperformed Hong Kong overnight, though both markets were up broadly. Volumes were elevated on the Mainland, versus the 1-year average, while Hong Kong volumes were slightly lower. Mainland investors reversed their net selling from yesterday, buying a net $150 million worth of Hong Kong-listed stocks and ETFs. Some net buys from yesterday turned to net sells, though, such as Tencent and Xiaomi. There was not a very strong direction in either the value or growth camp, though there was a slight growth bias as internet stocks were mostly flat.
Origin Quantum released the first-ever completely free-of-charge quantum computer operating system. This is consistent with China’s technology firms’ preference for open-source large language models (LLMs) that drive demand for paid cloud services.
Trump confirmed that the postponement of his trip to China will not be much more than a month, which is positive.
The China Securities Regulatory Commission (CSRC) approved 15 mutual funds overnight. Most of the new investment products will focus on AI and other key strategic initiatives, and the approval of these products comes just after the "Two Sessions" set out policy priorities for the next five years. Maybe these mutual fund approvals have been powering the higher-than-usual volume in Mainland China.
Tencent Q4 Earnings Overview
- Revenue +13% to RMB 194.4B versus estimate RMB 194.1B
- Net Income RMB 7.8B
- Net Margin 18%
- Earnings per Share (EPS) RMB 5.9
Tencent delivered strong results for the fourth quarter and year of 2025, mostly in line with analyst estimates for the top and bottom line. During the earnings call, management noted the increasing integration of its Hunyuan (inference) and Yuanbao (marketing) large language models with super apps WeChat and QQ. The company spent RMB 18 billion on AI initiatives in 2025 and will be substantially increasing its AI capital commitments in 2026. Cloud services achieved an operating profit of RMB 5 billion after breaking even in 2024, which is impressive. In other business lines, user time spent on social media increased by 20% in 2025, E-Commerce advertising spending decreased as companies focused on user subsidies rather than ads, and margins improved in Tencent's marketing services. Of note, Tencent's free cash flow increased over sixfold! Tencent announced a dividend of HKD 5.3 for the year 2025, reflecting the strong free cash flow growth and demonstrating the company's shareholder-friendly orientation.
Last Night’s Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.6% |
| Hang Seng Tech | HSTECH Index | 0% |
| Hong Kong Turnover | HKTurn Index | -10.4% |
| Hong Kong Short Sale Turnover | HKSST Index | 1.6% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 155.37 |
| China (Shanghai) | SHCOMP Index | 0.3% |
| China (Shenzhen) | SZCOMP Index | 1% |
| China (STAR Board) | Star50 Index | 1.4% |
| Mainland Turnover | .chturn Index | -7.4% |
| Japan | NKY Index | 2.9% |
| India | SENSEX Index | 0.8% |
| Indonesia | JCI Index | 1.2% |
| Malaysia | FBMKLCI Index | 1.1% |
| Pakistan | KSE100 Index | 3% |
| Philippines | PCOMP Index | 0.5% |
| South Korea | KOSPI Index | 5% |
| Taiwan | TWSE Index | 1.5% |
| Thailand | SET Index | 0.5% |
| Singapore | STI Index | 1.3% |
| Australia | AS51 Index | 0.3% |
| Vietnam | VNINDEX Index | 0.2% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 94 | 115 |
| Advancing Stocks | 58 (Hang Seng) | 118 (CSI 300) |
| Declining Stocks | 30 (Hang Seng) | 169 (CSI 300) |
| Outperforming Factors | Growth | Growth |
| Underperforming Factors | Value | Value |
| Top Sectors | Industrials, Health Care, Information Technology | Information Technology, Energy, Communication Services |
| Bottom Sectors | Consumer Staples, Real Estate, Energy | Real Estate, Consumer Staples, Consumer Discretionary |
| Top Subsectors | Semiconductors, Consumer Durables, Software & Services | Internet, Computer Hardware, Communication Equipment |
| Bottom Subsectors | Media & Entertainment, Health Care Equipment, Autos | Oil & Gas, Chemical Fiber Industry, Energy Equipment |
| Southbound Connect Buys | Alibaba, Xiaomi, YOFC | N/A |
| Southbound Connect Sells | SMIC, Tencent, Bright Smart | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.51 |
| Communication Services | 11 | 0.16 |
| Consumer Discretionary | 28 | 0.82 |
| Consumer Staples | 13 | -1.42 |
| Energy | 6 | -0.05 |
| Financials | 25 | 0.36 |
| Health Care | 16 | 1.49 |
| Industrials | 22 | 1.94 |
| Information Technology | 12 | 1.4 |
| Materials | 14 | 0.02 |
| Real Estate | 7 | -1.12 |
| Utilities | 11 | 0.53 |
| Mainland China Listed | 386 | 0.52 |
| Communication Services | 8 | 0.55 |
| Consumer Discretionary | 26 | -0.5 |
| Consumer Staples | 19 | -0.96 |
| Energy | 12 | 0.64 |
| Financials | 64 | -0.25 |
| Health Care | 31 | -0.13 |
| Industrials | 58 | 0.21 |
| Information Technology | 95 | 2.92 |
| Materials | 52 | -0.4 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.1 |
| Alibaba HK | 9988 HK Equity | 2.3 |
| JD.com HK | 9618 HK Equity | 0.6 |
| NetEase HK | 9999 HK Equity | 0.5 |
| Yum China HK | 9987 HK Equity | 0 |
| Baozun HK | 9991 HK Equity | 1.3 |
| Baidu HK | 9888 HK Equity | 2.2 |
| Autohome HK | 2518 HK Equity | 1.2 |
| Bilibili HK | 9626 HK Equity | 2.2 |
| Trip.com HK | 9961 HK Equity | 1.1 |
| EDU HK | 9901 HK Equity | 5.2 |
| Xpeng HK | 9868 HK Equity | -3.3 |
| Weibo HK | 9898 HK Equity | 0.7 |
| Li Auto HK | 2015 HK Equity | -6.2 |
| Nio Auto HK | 9866 HK Equity | 0.6 |
| Zhihu HK | 2390 HK Equity | -0.7 |
| KE HK | 2423 HK Equity | 1.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | -21.8 |
| Meituan HK | 3690 HK Equity | 0.4 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 2.3 |
| TENCENT HOLDINGS LTD | 0.1 |
| CNOOC LTD-H | -1.7 |
| XIAOMI CORP-CLASS B | -0.6 |
| KINGBOARD LAMINATES HLDG LTD | -4.3 |
| YANGTZE OPTICAL FIBRE AND-H | 11.6 |
| MINIMAX GROUP INC | 19.8 |
| BRIGHT SMART SECURITIES AND | -2.6 |
| KINGSOFT CLOUD HOLDINGS LTD | 18.2 |
| KNOWLEDGE ATLAS TECHNOLOGY-H | 19.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | 10.7 |
| ZHONGJI INNOLIGHT CO LTD-A | 6.8 |
| SUZHOU DONGSHAN PRECISION-A | -2.1 |
| SUZHOU TFC OPTICAL COMMUNI-A | 8.3 |
| WUS PRINTED CIRCUIT KUNSHA-A | 6.3 |
| GOLDWIND SCIENCE & TECHNOL-A | 8.6 |
| GIGADEVICE SEMICONDUCTO-CL A | 5.2 |
| VICTORY GIANT TECHNOLOGY -A | 3.4 |
| BIWIN STORAGE TECHNOLOGY C-A | 9.5 |
| HGTECH CO LTD-A | 3.3 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.88 versus 6.88 yesterday
- CNY per EUR 7.92 versus 7.95 yesterday
- Yield on 10-Year Government Bond 1.82% versus 1.83% yesterday
- Yield on 10-Year China Development Bank Bond 1.97% versus 1.98% yesterday
- Copper Price -1.50%
- Steel Price -0.10%
KraneShares China ETF News delivers the latest news, insights, and analysis on the key drivers shaping China’s capital markets and China ETFs. As a pioneer in the China ETF market for over a decade, KraneShares provides investors with innovative access to China’s fastest-growing sectors, including technology, artificial intelligence (AI), internet, renewable energy, electric vehicles, humanoid robotics, and healthcare.
Explore our full range of U.S.-listed China ETFs designed to help investors access China’s evolving economy and long-term growth opportunities. View the full KraneShares China ETF list.
