US$3 billion blunder: Walmart, Prosus, Tencent miss the China rally with premature exits

Beijing’s big-bang stimulus may have restored more than US$3 trillion of value to Chinese stocks, but not everyone has been lucky enough to reap that windfall, especially those who timed their exit before the rally took hold.

Retail giant Walmart sold 144.5 million of JD.com’s US-listed shares at US$24.95 each on August 20, missing out on potential gains of US$2.8 billion had it held on to its stake for another six weeks through October 2.

Global investment firm Prosus, which dumped 14.5 million shares of Trip.com at US$51.40 each in a block trade last week, would have been better off by US$225 million. Baidu, too, lost out on additional gains of US$123 million from the sale of 10.5 million shares in the travel agency last week.

Tencent Holdings might also be ruing its decision to sell a stake in Futu last week. The internet giant and WeChat owner could have reap another US$85 million of gain, following the 40 per cent rally in the online broker’s share price after that sale.

These badly timed exits have led to missed opportunities of more than US$3.3 billion, underscoring how Beijing’s massive stimulus package caught China bears off guard. A 27 per cent rally in the CSI 300 Index, which tracks the performance of the 300 largest stocks on the Shanghai and Shenzhen bourses, has put the squeeze on short-sellers, costing them US$6.9 billion in mark-to-market losses, according to an estimate by US market analytics firm S3 Partners.

In total, more than US$3 trillion in market value has been restored in Chinese stocks since Beijing unveiled its biggest stimulus bazooka to stop a rot in the property and stock markets. That has also helped China reclaim the biggest share of weight in the MSCI Emerging Markets Index at 27.8 per cent, according to Bloomberg estimates, up from 24.4 per cent in August.