Carmignac’s Haiyan Li has claimed Chinese internet firm Tencent has the potential to beat giant social network Facebook as it gets more market share overseas.
Speaking to Fund Strategy at Carmignac’s annual investor conference in Paris, Li, who manages the £16.9m Carmignac Portfolio China fund, says Tencent has been a preferred stock “for many years”. It is the China fund’s largest holding at 9.6 per cent, and currently makes up 1.4 per cent in the firm’s Global fund and 2 per cent of the Emerging Market fund.
She says: “Tencent is ahead of Facebook. Facebook is trying to copy [it]. Tencent has 38 per cent of market share of online payment, [but] it is much more of Facebook, it is a combination of Facebook, Whatsapp, Amazon, Twitter. It has developed many functions, it is very revolutionary.
“Facebook today has reached a maturity and they are trying to find similar [functions] as Tencent to increase mobile engagement. For me Tencent focus will be Asia, Latin America and Africa. For the moment there’s no major front battle but the day will come.”
Tencent has 900 million users including 25 per cent of overseas users. It has 18 per cent of its revenue coming from advertising and the rest in cloud and payments.
The French manager holds Facebook within their equity strategies as one of its “key earnings”, as revealed by founder Édouard Carmignac at the event.
Li said: “It is not just about the advertising paid to Tencent, it is about offline merchants too. You can use the QR code for example. The progress is also quicker compared to Alipay, the Chinese third-party online payment platform. A few years ago Alipay had over 70 per cent of market share and now it is 50 per cent.
“Tencent is a very consensual name in investments but we should really judge the investment case based on whether it is very overweight in an active fund, we need to look at the potential user engagement. Every day the average user spends 1.5 hours on WeChat [part of Tencent], for example.”