(Yicai) Dec. 11 -- South African investment firm Naspers, which is Tencent Holdings' biggest shareholder, reduced its stake in the Chinese internet behemoth by 513,500 shares on Dec. 7, but the next day Tencent countered by repurchasing more than twice as much to keep its stock price steady.

Tencent’s share price [HKD:0700] closed up 0.52 percent at HKD307.2 (USD39.35) today.

Dutch unit Prosus sold 513,500 of Tencent’s shares on Dec. 7 at an average price of HKD307 (USD39.32) apiece, trimming its holdings to 24.99 percent, the Hong Kong Stock Exchange said on Dec. 8. In the past year, the Amsterdam-based company has sold HKD60 billion (USD7.7 billion) worth.

Tencent then repurchased 1.32 million shares on Dec. 8 at a cost of HKD403 million (USD51.6 million), the Shenzhen-based tech giant said on Dec. 8. In the 12 months ended Sept. 30, Tencent has bought back about HKD45.4 billion of its shares.

Tencent has strong cash flow and a very large investment portfolio, half of which are floating stocks, a company executive said at the third-quarter earnings call. Tencent will increase shareholder returns through the flexible use of different tools, such as buybacks, dividends, and investor share distributions.

The market valuations of technology and internet companies listed in Hong Kong are not very high and many major shareholders are paring their stakes, a senior Hong Kong fund manager said.

Although the industry enjoyed high valuations and prices prior to 2021, overall growth has slowed down, the fund manager said. There are also more competitors such as Douyin, the Chinese version of TikTok, which are seizing market share.

The growth of Chinese internet firms has not met expectations and the industry is undergoing a reshuffle, said Lin Jiayi, general manager of Xuanjia Financial.

The market capitalization of Chinese internet firms is close to an all-time low, so share buybacks may be the best option for Tencent’s shareholders, the executive said.

Tencent’s net profit surged 39 percent in the third quarter from a year earlier to CNY44.9 billion (USD6.2 billion), while revenue jumped 10 percent to CNY154.6 billion (USD21.5 billion), according to the company’s unaudited financial results released last month.

Editors: Shi Yi, Kim Taylor