The Betashares Asia Technology Tigers ETF (ASX: ASIA) is pushing upwards today. This exchange-traded fund (ETF) gives investors exposure to the 50 largest technology companies in Asia, outside of Japan. However, nearly 70% of the fund is comprised of its top 10 holdings.
Given this, today’s move could be the reflection of a recent announcement from one of its largest holdings. One company that might fit the criteria is Tencent Holdings Ltd (HKG: 0700). The China-based tech conglomerate published its third-quarter results yesterday.
While the tech company’s share price is moving to the downside, its performance during the latest quarter might be attracting some investors to take a closer look at the ASIA ETF.
How did the ASIA ETF’s third largest holding fare in Q3?
It was a shaky quarter for Tencent, having to appease China’s intensified gaming policy for children. In August, the government instated a maximum of 3 hours of gaming for people under the age of 18. This compared to the previously allowed one and a half hours per day.
Based on the metrics for the third quarter, the new restrictions had their desired effect, with gaming among children through Tencent’s platforms dropping significantly. Under the category ‘domestic games’, minors accounted for only 0.7% of the company’s recorded time spent on its platform in September. For reference, this is in contrast to 6.4% in September 2020.
Despite this setback, domestic games revenue still managed to increase by 5% year on year to RMB33.6 billion (~A$7.18 billion) in the quarter. Meanwhile, unhampered by government restrictions, international games revenue experienced a major uptick of 20% year on year to RMB11.3 billion (~A$2.41 billion). This result was due to robust performances of games such as Valorant and Clash of Clans.
Out of the company’s various segments, revenue from fintech and business services delivered the highest growth in the quarter. On a year-over-year basis, fintech revenue increased 30% to RMB43.3 billion (~A$9.25 billion).
Overall, Tencent still increased its total revenue by 13% year on year to RMB142.4 billion (~A$30.43 billion) in Q3. However, diluted earnings per share (EPS) fell 1% to RMB3.269 (~A$0.70).
Why isn’t the ETF down today?
Even though the Tencent share price is falling after these results, the ASIA ETF is humming along with a nice bit of green on Thursday.
Fortunately, ETF’s tend to be diversified across numerous companies. Such is the case for the ASIA ETF, with Tencent only making up roughly 9% of the fund’s total holdings. Other tech giant’s featured in the ETF include Alibaba Group (NYSE: BABA), which experienced a 2.4% increase in its share price overnight.
The post Here’s why the ASIA (ASX:ASIA ETF share price is in focus on Thursday appeared first on The Motley Fool Australia.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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