Report shares tumbled Thursday after China-based gaming and social media group Tencent Holdings (TCHEY) dumped $16.4 billion shares in the e-commerce group amid Beijing's broad crackdown on the country's powerful tech sector.
Tencent will slash its holding in China's second-biggest e-commerce company to 2.3 percent from around 17 percent now and losing its spot as JD.com's biggest shareholder to Walmart.
The company will give out 457.3 million Class A shares in JD.com, representing about 86.4 percent of its total stake and 14.7 percent of JD's total issued shares, according to a filing to the Hong Kong stock exchange.
"This seems to be a continuation of the concept of bringing down the walled gardens and increasing competition among the tech giants by weakening partnerships, exclusivity and other arrangements which weaken competitive pressures," said Mio Kato, a LightStream Research analyst who publishes on Smartkarma.
"We believe the near-term selling pressure on JD’s share price presents a good opportunity for investors to accumulate as Tencent’s stake reduction is unlikely to have an impact on JD’s operation. JD is our top pick among the e-commerce stocks.," he added.
The companies said they would continue to have a business relationship, including an ongoing strategic partnership agreement, though Tencent Executive Director and President Martin Lau will step down from JD.com's board immediately.
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