You need to send in the correct charset to htmlentities. It looks like you're using UTF-8, but the default is ISO-8859-1. Change it like this:
$encoded = htmlentities($text, ENT_COMPAT, 'UTF-8');
Another solution is to convert the text to ISO-8859-1 before encoding, but that may destroy information (ISO-8859-1 does not contain nearly as many characters as UTF-8). If you want to try that instead, do like this:
$encoded = htmlentities(utf8_decode($text));
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