Tencent Holdings shares are listed on the Hong Kong Stock Exchange under the symbol 00700.HK and are also traded on the U.S. over-the-counter (OTC) market in the form of American Depositary Receipts (ADRs) under the symbol TCEHY.

I. Fundamental Concepts

1. Tencent Holdings (00700.HK)

Tencent Holdings, under the stock code 00700.HK on the Hong Kong Stock Exchange, primarily caters to investors in Asia and worldwide. As a prominent figure in the internet industry, Tencent operates across diverse sectors including social media, fintech, entertainment, gaming, and various others.

2. Tencent ADR (TCEHY)

Tencent ADR represents Tencent Holdings in the American market through American Depository Receipts (ADR). ADR facilitates the trading of non-U.S. companies' stocks in the U.S. securities market, with each ADR corresponding to a specific quantity of Tencent Holdings' common stock. This arrangement allows U.S. investors to indirectly invest in Tencent Holdings' stock in USD without engaging in direct trading on the Hong Kong market. ADR serves as a convenient avenue for U.S. investors to partake in foreign companies while benefiting from regulatory safeguards in the U.S. securities market.

II. Disparities in Market Trading

1.  Discrepancies in Market and Timing

-Tencent HK: Listed on the Hong Kong Stock Exchange, traded and valued in Hong Kong Dollars, with a trading unit of 100 shares, suited for larger investors. Trading hours span from 9:30 to 16:00 Beijing time, with a midday break from 12:00 to 13:00.

-Tencent ADR: Listed on the New York Stock Exchange, valued in USD. Tencent Holdings ADR enables investors to trade in smaller units, down to a single share, making it favorable for smaller investors. Trading hours operate from 9:30 to 16:00 Eastern Time, devoid of a midday break.

2.  Disparities in Liquidity

-Tencent HK: As a mainboard-listed entity on the Hong Kong Stock Exchange, Tencent HK showcases robust liquidity, drawing in a substantial number of institutional and retail investors, notably from mainland China.

-Tencent ADR: Despite possessing favorable liquidity, ADR's trading volume slightly trails that of the Hong Kong market. ADR's liquidity leans more towards U.S. market investors and capital inflows.

III. Price Discrepancies

Owing to trading in distinct markets with temporal variations, Tencent Holdings' ADR and Tencent HK stocks manifest certain price discrepancies, primarily revolving around:

1. Exchange Rate Fluctuations: Variations in exchange rates directly impact ADR prices due to Tencent HK trading in Hong Kong Dollars while Tencent ADR is denominated in USD. Alterations in the HKD to USD exchange rate may trigger ADR price fluctuations, even in the absence of fundamental shifts in Tencent's operations.
2. Price Volatility: Price fluctuations may diverge between ADR and HK stocks due to trading across different time zones. Particularly when the Hong Kong market concludes and the U.S. market initiates trading, global market dynamics may prompt an earlier reaction from ADR.
3. Discount/Premium Phenomena: Within distinct market environments, Tencent ADR and Tencent HK prices may showcase discount or premium phenomena. Generally, ADR prices tend to marginally surpass Hong Kong stock prices, influenced by U.S. market investor preferences that drive prices upwards.

IV. Investor Demographics and Target Audience

1. Tencent HK (00700.HK)

-Investor Demographics: Tencent HK chiefly targets Asian investors, particularly those hailing from mainland China. These investors possess familiarity with the Hong Kong market and can engage in investment activities through avenues like Stock Connect.

-Target Audience: Tailored for investors keen on the Asian market, specifically the Chinese market. Moreover, investors utilizing Stock Connect can directly engage in Tencent HK investments.

2. Tencent ADR (TCEHY)

-Investor Demographics: Tencent ADR predominantly targets U.S. investors, especially institutions and individuals seeking exposure to Chinese tech enterprises. U.S. investors leverage ADR as a means to circumvent direct investment restrictions within the Chinese mainland market.

-Target Audience: Geared towards U.S. and global investors interested in Tencent investments via the U.S. capital market, particularly those unfamiliar with the operational intricacies of the Hong Kong capital market.

V. Market Influencing Factors

1. Influence of Market Sentiment on Tencent HK

The stock valuation of Tencent in Hong Kong is notably swayed by domestic Chinese policies, global trends within the tech industry, and local market sentiment in Hong Kong. Given Tencent's substantial reliance on the Chinese market, particularly in gaming and social media domains, alterations in Chinese policies wield significant influence over stock prices.

2. Influence of Market Sentiment on Tencent ADR

Market sentiments have a more pronounced impact on Tencent ADR prices, particularly emanating from U.S. market dynamics and the broader international economic landscape. Variables like the Federal Reserve's interest rate determinations, fluctuations in the USD exchange rate, and the performance of global tech equities can exert influence over ADR valuations.

In summation, Tencent Holdings ADR and Tencent HK demonstrate disparities in trading arenas, liquidity profiles, and price dynamics, among other facets. Investors should tailor their investment strategies in accordance with their requirements and the prevailing market conditions. Irrespective of the chosen approach, diligent monitoring of exchange rate dynamics, market sentiments, and pertinent policy developments remains imperative.

How to Invest Using uSMART

After logging into the uSMART HK app, click on the "Search" option located at the top right of the page. Enter the stock code, such as "TCEHY" to access the details page where you can review transaction details and historical trends. Then, click on the "Trade" option at the bottom right corner, select the "Buy/Sell" function, and finally fill in your transaction conditions before submitting your order.