(Bloomberg) -- Tencent Holdings Ltd. and stocks linked to the company rallied on Friday, fueled by investor enthusiasm over a new gifting function on its popular WeChat platform.
Tencent’s shares jumped as much as 3.5% in Hong Kong, putting them on course for their first weekly gain in months. Weimob Inc, a cloud computing company backed by the Chinese tech giant, rose as much as 23%. On the mainland, snack makers Yankershop Food Co and Shanghai Ziyan Foods Co rose by the daily limit of 10%, as did cosmestics producer Guangzhou Ruoyuchen Tech Co.
The stocks jumped in the wake of a move by a WeChat-based shopping platform to test a gifting function ahead of the holiday season. It will allow users to give gifts priced less than 10,000 yuan ($1,370), excluding jewelry and educational services, according to a statement.
Strong holiday gift-giving demand should help drive direct user traffic to WeChat mini stores and cultivate shopping habits, write Guotai Junan Securities analysts including Zi Meng in a note. Snacks, cosmetics and service providers are likely beneficiaries, they added.
“It can be a significant opportunity for Tencent since they have the user reach but never really capitalized on it previously”, said Vey-Sern Ling, managing director at Union Bancaire Privee. “Like with the case of video accounts, Tencent is capable of catching up as a latecomer with the help of its strong traffic and execution.”
WeChat is making e-commerce an integral part of its offerings, which already span everything from ride-hailing to paying gas bills. Its mini stores started off by focusing on live-stream shopping, but have quickly expanded to connect with the platform’s other features, including social feeds and chat groups.
Shares of China’s e-commerce giant Alibaba Group Holding Ltd. fell as much as 4.3% while JD.com Inc. dropped 2.8%.
--With assistance from John Cheng and Zheping Huang.
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