Hong Kong — This past quarter, Tencent surprised investors by blowing past analysts’ profit estimates by about 35%. Most of this was fueled by the internet company’s gains in portfolio investments. With their core businesses growing strong — Alibaba in e-commerce and Tencent in gaming — the two companies have ventured out to invest a combined $55bn in everything spanning fintech to bike rentals. How these two Chinese web giants account for valuation increases and write-downs in their start-up investments is worth noting, because both have sprinkled cash into more than 100 companies, according to data compiled by Bloomberg. Alibaba, listed in the US, reports under generally accepted accounting principles (GAAP) rules and doesn’t record any valuation gains for minority investments in public or private companies. For example, Alibaba is a minority shareholder in Weibo; when it bought into the social-media company in 2013, it was valued at just more than $3bn. Now, Weibo is worth more t...
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