Updated on 30th January 2022
Tencent (700.HK) is distributing JD.com (9618.HK) shares as dividends. It is a special dividend. Shareholders will get 1 Class A ordinary share of JD.com for every 21 shares, being rounded down to the nearest whole number of JD.com shares. This means we will get 14 free shares for the 300 shares of Tencent. The ex-dividend date is 20th January 2022. Book close date is between 24th and 25th January 2022.
On the date which Tencent announced this news, JD.com’s share price dropped. There will be a short-term negative impact on the investor sentiment on JD.com. The share price should remain subdued. However, there are no fundamental changes by Tencent’s stake reduction. We need to monitor the infrastructure tied up between JD.com and Tencent.
JD.com used to be an associate of Tencent. With the divestment, JD.com needs to continue to add value for Tencent. If Tencent aims to develop and grow its own e-commerce arm, this will become direct competition.
Within the next few weeks, whenever there is a chance to accumulate more Tencent shares due to price correction, we will do that. There is a recommendation to sell JD.com shares and buy Tencent to balance the portfolio holdings.
You read here on why we bought Tencent.
Update
We bought another 500 shares on 19th January 2022, building up 1000 shares. This will entitle us to the distribution of 47 shares of 9618.HK JD.com. The shares are odd sizes and will be difficult to sell in the future. When there’s a correction in JD.com’s share price, we will buy in to bring the shares to the required lot size.
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