What's going on?

Chinese internet behemoth Tencent reported its highest-ever quarterly profit on Wednesday, perhaps confounding investors who wiped $17 billion off its $480 billion value (tweet this) on Tuesday.

What does this mean?

Tencent owns the all-powerful WeChat � China�s answer to WhatsApp. In some ways, it’s China�s equivalent of Facebook. Investors were worried that Tencent�s ongoing shopping spree � investing in cloud computing, entertainment and physical retail in a bid to compete with Alibaba (China�s $500 billion answer to Amazon) � would result in the company posting its worst-ever profit margin.


But thanks to the company�s online advertising � where sales grew by 55% compared to the same time last year � as well as messaging services and games like Honor of Kings, Tencent proved its naysayers wrong by reporting first-quarter profits a third higher than investors expected.

Why should I care?

For markets: Tencent�s stock fell by more than ten cents before Wednesday.

Tencent�s stock listed in Hong Kong has fallen by about 15% since January�s record highs, shedding nearly $80 billion in value. As the company spends more on going head-to-head with Alibaba�s core strengths, investors may have looked west and concluded that Tencent�s fate might mirror the handful of large companies that have jousted with Amazon and lost.

The bigger picture: There�s a party in China and everyone�s invited.

Last year, MSCI � a company that decides which stocks should be included in certain investment �baskets� (e.g. an index) � said it wanted to include stocks from mainland China in its emerging markets lists � recognizing the steps the country�s taken to become more open to foreign investors. In April, China�s president reiterated vows to open up the country�s economy to the international community � and JPMorgan Chase, among other global investment banks, took notice: it all but exited China in 2016, but recent legal changes have now enticed it back.