Tencent Holdings Ltd. provides value-added services, online advertising services, and fintech and business services. It operates through the following segments: Value-Added Services, FinTech and Business Services, Online Advertising, and Others. The Value-Added Services segment is involved in online and mobile games, community value-added services, and applications across various Internet and mobile platforms. The FinTech and Business Services segment offers fintech and cloud services, which include commissions from payment, wealth management and other services. The Online Advertising segment refers to the display based and performance-based advertisements. The Other segment is composed of trademark licensing, software development services, software sales, and other services. The company was founded by Yi Dan Chen, Hua Teng Ma, Chen Ye Xu, Li Qing Zeng, and Zhi Dong Zhang on November 11, 1998, and is headquartered in Shenzhen, China.
COMMENTARY
Market Commentary
Global equity markets advanced in June, driven by renewed optimism around artificial intelligence and a more constructive view on the macroeconomic outlook. The US market outperformed most developed peers for the month, though it remains the weakest major region so far this year. Sentiment continues to be weighed down by tariff threats, inflation concerns, US dollar weakness, and signs of a slowing domestic economy.
Emerging Markets posted strong returns, led by South Korea. Local equities surged following the election of a new president, whose proposed policies to improve corporate governance and boost shareholder returns contributed to the rally. European markets also advanced, although gains were more modest as macroeconomic indicators remained steady and risk appetite improved.
Information Technology and Communication Services were the strongest-performing sectors. Many non-Chinese AI-related companies rebounded, recovering from earlier-year declines related to the Deepseek incident and tariff-driven volatility. Confidence in the AI investment theme was supported by further advances in model performance and efficiency, including improvements in complex reasoning and reduced inference costs.
AI models released in 2024 have shown meaningful improvements, with better reasoning capabilities and lower inference costs. These advances are already delivering measurable business outcomes, reinforcing the view that AI is moving from theory to commercial application. While some companies, including OpenAI, Apple, and Meta Platforms, have experienced delays in rolling out new products, progress has remained steady. Confidence is growing that AI can support productivity gains and new revenue streams across a range of industries, not just within the technology sector.
These developments helped lift equity markets, even as policy and fiscal uncertainty continued to shape sentiment.
Portfolio Commentary
The Fund returned 1.30% in June, slightly trailing the broader market, with relative weakness across Materials and select Information Technology holdings. AI remained a key driver of both market sentiment and portfolio performance, with a number of holdings benefiting from improved expectations for commercial adoption across industries.
Disco Corporation, a Japanese manufacturer of semiconductor processing equipment, was a notable positive contributor. Shares rose following signs of renewed strength in AI capital expenditure, as leading US technology companies reaffirmed their investment plans. Disco Corporation is the global leader in equipment used to cut, grind, and polish semiconductor chips, and is well positioned to benefit from industry shifts toward packaging multiple smaller dies into a single advanced unit. The Fund initiated a position during the month, reflecting the team’s conviction in the company’s growth outlook and product leadership.
Several other holdings contributed positively. Taiwan Semiconductor Manufacturing Company (TSMC) rallied after reporting record-breaking June revenue, supported by accelerating demand for AI chips and strong outsourcing orders from clients such as Nvidia and Intel. Netflix advanced on the back of strong operational momentum, supported by positive commentary from management, analyst upgrades, and growing optimism around its ad-supported tier and expansion into live sports programming. Meta Platforms also performed well, reaching an all-time high by month-end as its AI initiatives continued to drive product innovation and user engagement.
In contrast, Adobe detracted from returns. The US-based software company declined on concerns that its monetisation strategy for AI, which involves integrating external models from OpenAI and Google into its Firefly platform, may take longer than expected to deliver results. CME Group, a leading US derivatives exchange, also underperformed after a strong run earlier in the year. In Materials, Symrise, a German producer of fragrances and flavours, fell after management flagged softer second-quarter growth in a late-month update.
The Fund remains focused on identifying high-quality companies with durable competitive advantages and long-term growth drivers. Portfolio positioning continues to reflect a disciplined bottom-up approach, with selective exposure to companies expected to benefit from structural themes such as AI, while maintaining a strong emphasis on fundamental resilience.