The software and internet services industry has always been plague by high volatility given that we are at the age of rapid technology innovation. Every other day the market is bombarded by the launch of new products or applications for consumers to download or purchase.
While some continue to stay away from the industry, Elinor Leung from CLSA has decided to embrace the current market volatility wholeheartedly, looking at the market diligently for trading opportunities.
“It’s particularly difficult for the internet sector because all the stocks are actually high beta. There’s a lot of action going on and is actually very interesting because of the volatility,” Leung confides. “Late last year or earlier this year, we still see some play up in the sector because of the volatility.”
One of her best calls has been Tencent, China’s largest and most used internet service portal. The stock has outperformed the firm’s expectations, surging 60%-70% year-to-date, and will continue to be a favourite pick into 2013 as the company continues to monetise its pipeline of new products.
“Tencent has done very well because majority of the revenue comes from the gaming sector which is immune from the economic slowdown,” she says.
While the software and internet services industry has provided Leung with some good opportunities, there were also ones about which Leung was bullish but didn’t perform. For example, her call on Baidu, China’s biggest search engine.
“The share price hasn’t done much. It’s not because of the earnings but because of the macro perception of the Chinese economy,” she says. “There’s also the recent concern of competition and mobile monetisation.”
When she isn’t reading up on click rates and new websites, Leung likes some tennis and jogging. She says both help to “get the stress out and energy levels up”.