Nyse Order Imbalance 389797.0 Shares On Sell Side

A downtrend has been apparent in Tencent Music Entertainment Group Sponsored ADR (TME) lately with too much selling pressure. The stock has declined 12% over the past four weeks. However, given the fact that it is now in oversold territory and Wall Street analysts are majorly in agreement about the company's ability to report better earnings than they predicted earlier, the stock could be due for a turnaround.

Here is How to Spot Oversold Stocks

We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum oscillator that measures the speed and change of price movements.

RSI oscillates between zero and 100. Usually, a stock is considered oversold when its RSI reading falls below 30.

Technically, every stock oscillates between being overbought and oversold irrespective of the quality of their fundamentals. And the beauty of RSI is that it helps you quickly and easily check if a stock's price is reaching a point of reversal.

So, by this measure, if a stock has gotten too far below its fair value just because of unwarranted selling pressure, investors may start looking for entry opportunities in the stock for benefitting from the inevitable rebound.

However, like every investing tool, RSI has its limitations, and should not be used alone for making an investment decision.

Why a Trend Reversal is Due for TME

The RSI reading of 29.31 for TME is an indication that the heavy selling could be in the process of exhausting itself, so the stock could bounce back in a quest for reaching the old equilibrium of supply and demand.

Tencent Music Entertainment Group shares fell 8.10% to $10.62 Tuesday afternoon as concerns over intensifying U.S.-China relations sparked a broader selloff in Chinese equities.

What To Know: President-elect Donald Trump's reported consideration of China hawks Marco Rubio and Mike Waltz for key administration roles has raised fears of a more aggressive U.S. stance, which could result in heightened scrutiny of Chinese tech firms operating in the U.S.

TME, a major player in China’s online music and entertainment sector with streaming platforms like QQ Music and Kugou Music, depends heavily on cross-border digital licensing deals, and increased trade restrictions or new regulations could complicate its access to international content and partnerships.

Read Also: Trump’s Treasury Pick Frontrunner Scott Bessent Could Shift Wall Street, Crypto

Additionally, weak credit data released in China heightened investor concerns about sluggish domestic demand, which is critical for TME's growth.

October's loan growth came in below expectations, signaling that Chinese consumers may be tightening their spending—a worrying trend for TME, which relies not only on ad revenue but also on in-app purchases and paid subscriptions to boost revenue.

Slowing consumer demand in China could make it harder for TME to grow its paying subscriber base, a key metric in its long-term strategy to diversify beyond free-tier streaming services.

Read Also: Why PDD Holdings Stock Is Falling

How To Buy TME Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Tencent Music Enter Group’s case, it is in the Communication Services sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, TME has a 52-week high of $15.77 and a 52-week low of $6.76.

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Asian equities traded in the US as American depositary receipts were moving sharply lower Tuesday morning, falling 1.36% to 2,049.72 on the S&P Asia 50 ADR Index.

From North Asia, the gainers were led by pet-focused platform Boqii and fintech company Pintec Technology , which climbed 7.2% and 4.4% respectively. They were followed by online game developer Gravity and mobile healthcare platform 111 , which rose 2% and 1.5% respectively.

The decliners from North Asia were led by music streaming service Tencent Music Entertainment Group and biotech firm Zai Lab , which lost 9% and 8.9% respectively. They were followed by consumer lending firm LexinFintech and biopharmaceutical company BeiGene , which dropped 8.1% and 7% respectively.

From South Asia, the gainers were led by tech conglomerate Sea , which shed 16%, followed by IT firms Sify Technologies and Infosys , which were down 2.3% and 0.3% respectively.

The decliners from South Asia were led by telecommunications operators Telekomunikasi Indonesia and PLDT , which fell 4.5% and 3% respectively. They were followed by pharmaceutical company Dr. Reddy's Laboratories , which was off 1.3%.