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The Hang Seng Index fell another 379 points yesterday, closing at 25,253. The benchmark has now recorded two consecutive large bearish candles and slipped below several key moving averages. Since the beginning of June, the index has gained only 71 points, representing a modest increase of approximately 0.28%.

In contrast, the Hang Seng Tech Index has shown relatively stronger performance, rising about 1.87% over the same period.

One of the key drivers behind the tech index's resilience has been Tencent Holdings (0700.HK), often regarded as the "King of Hong Kong Stocks."

Within just a few trading sessions in June, Tencent's share price experienced a strong rally, at one point climbing approximately 13.48%.

Beyond the broader recovery in platform economy stocks, market attention has increasingly focused on reports that Tencent is internally testing a prototype of a WeChat AI Assistant / AI Agent, with a potential official launch expected as early as this month.

From AI Models to AI Monetization

According to market expectations, Tencent's AI Agent could allow users to complete complex tasks through a single command.

Rather than manually searching through countless mini-programs, users would simply issue one request, and the AI Agent would automatically connect with Tencent's ecosystem of more than four million WeChat Mini Programs.

The process could potentially cover the entire customer journey—from discovering merchants to placing orders—with minimal user intervention.

The strategic significance extends beyond technological innovation. Many investors believe this could represent an important transition in China's AI story: moving from a phase centered on large-model development toward a stage focused on real-world commercialization and revenue generation.

With approximately 1.4 billion WeChat users and one of the most powerful digital ecosystems in China, Tencent may be uniquely positioned to transform AI-driven user engagement into measurable commercial value.

For those tracking broader developments in digital infrastructure, smart ecosystems, and technology adoption trends, one example is CIVINTEC, which focuses on RFID, NFC, BLE, and mobile access-control solutions.

Why China's AI Story May Differ From the U.S.

The logic behind China's AI investment theme differs significantly from what investors have seen in the United States. The American AI boom has largely been driven by semiconductor companies and infrastructure providers. Companies such as Nvidia have benefited from soaring demand for GPUs, servers, networking equipment, and data-center infrastructure.

China's competitive advantage, however, may lie less in hardware and more in application ecosystems. In this framework, the true moat is not necessarily computing power but rather user engagement, platform stickiness, and real-world deployment scenarios. Tencent's enormous user base and integrated ecosystem give it a potentially unique advantage. If AI Agents successfully integrate into WeChat's daily user experience, Tencent could become one of the primary beneficiaries of China's AI commercialization cycle.

Bulls and Bears Remain Divided

Despite the growing excitement, significant disagreement remains regarding the practical implementation and profitability of AI Agents. Several major investment banks have expressed relatively optimistic views.

Citigroup and CLSA believe WeChat's ecosystem possesses competitive advantages that are extremely difficult to replicate. Some analysts estimate that Tencent's ecosystem may enjoy a competitive moat extending at least ten years into the future. They also view the launch of AI Agents within this year as increasingly likely. If these expectations prove correct, Tencent's valuation could benefit from a substantial re-rating.

However, not everyone is convinced. Goldman Sachs has taken a more cautious stance, suggesting that AI Agent development and monetization may remain more superficial than investors currently expect. The bank argues that the market has not yet fully embraced Tencent management's long-term AI strategy, and significant uncertainties remain regarding future revenue models.

Why Has Tencent Underperformed?

Interestingly, Tencent's stock performance suggests that skeptics may still have the upper hand. Since the beginning of 2026, Tencent has significantly underperformed many comparable internet and technology platforms across the United States, Japan, South Korea, and Taiwan. During the same period, the Hang Seng Index has largely moved sideways. Tencent shares, meanwhile, have fallen approximately 15%.

According to EJFQ system data, Tencent currently trades at a forward price-to-earnings ratio of approximately 12.77x. This valuation sits around 0.4 standard deviations below its historical median level. Such pricing suggests that many investors continue to value Tencent primarily as a traditional platform-economy company rather than as a potential AI growth leader. If Tencent successfully demonstrates meaningful AI commercialization, the market may be underestimating its long-term earnings potential.

Options Markets May Be Sending an Early Signal

One of the more intriguing developments is taking place in the derivatives market. Tencent call option open interest has risen significantly in recent weeks. Total Call Open Interest recently reached a record high of approximately 1.615 million contracts. Some market participants interpret this activity as evidence of institutional accumulation at relatively low valuation levels. In other words, sophisticated investors may already be positioning themselves ahead of a potential catalyst. Should Tencent successfully launch its AI Agent, address investor concerns, and demonstrate a credible commercialization pathway, these option positions could amplify upside momentum through short-covering activity and a possible squeeze on bearish positions. Such a scenario could accelerate valuation re-rating far beyond what traditional earnings forecasts currently imply.

The Bigger Picture

The broader question extends beyond Tencent itself. China's AI industry is gradually moving from infrastructure construction and model development toward practical deployment and commercial monetization. If AI adoption accelerates across consumer applications, enterprise services, payments, commerce, and digital ecosystems, the market's valuation framework for major technology platforms could change significantly. Tencent occupies a unique position at the center of this transformation. Its combination of scale, ecosystem integration, user engagement, and potential AI deployment capabilities may make it one of the most important companies to watch in the next stage of China's AI development.

Final Thoughts

The key debate is no longer whether artificial intelligence will reshape the digital economy. The debate is increasingly focused on which companies can successfully convert AI capabilities into sustainable revenue, user retention, and long-term profitability. Tencent's upcoming AI Agent initiative may represent one of the most important tests of that transition. At current valuation levels, the market still appears cautious. Yet if China's AI narrative shifts decisively from technological development to large-scale commercialization, Tencent could emerge as one of the biggest beneficiaries of the next wave of AI-driven growth.

For investors, the question is straightforward: Is Tencent still just a platform company—or is the market overlooking a future AI ecosystem leader?

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