61.52 -0.78 (-1.25%)
Before hours: 7:00AM EDT
|Bid||61.33 x 800|
|Ask||61.59 x 900|
|Day's range||62.12 - 66.35|
|52-week range||25.77 - 69.18|
|Beta (5Y monthly)||0.98|
|PE ratio (TTM)||423.81|
|Forward dividend & yield||N/A (N/A)|
|1y target est||N/A|
(Bloomberg Opinion) -- Time will be the next frontier in India’s digital battlefield; dollars will follow the hours consumers spend online.India has left a void in their day by banning 59 Chinese apps after a border dispute with its northern neighbor led to violent clashes. The video-sharing platform TikTok, which became a craze in towns and villages as a medium of expression, is gone. So are its smaller cousins, like Bigo Live and Likee.What can fill the gap? Thanks to the world’s cheapest data charges of 9 cents per gigabyte, Indian smartphone users are guzzling content for six hours plus. For local startups like Glance, which offers games, news and video on the mobile lock-screen, the ban on Chinese competition is a chance to add to its tally of 100 million daily active users. The country’s youth bulge also makes it a perfect occasion for homegrown education technology unicorns like Byju to scale up.But the ultimate prize may go to super-apps that meld content and commerce in the 16 Indian languages besides English that boast anywhere between 5 million to half a billion speakers. To not have to download multiple apps to do different things will save phone memory, an important consideration for those who access the internet on low-end devices. Tencent Holdings Ltd.’s WeChat, which offers everything from messaging to gaming and financial services, provides a successful template. Chinese users are also online for six hours a day, mostly to browse content, particularly social media. Although only 4% of their time is spent on e-commerce, it’s enough to drive $1.5 trillion in annual online sales. The smaller Indian market, with online sales of $40 billion, will want to copy the playbook. The most obvious super-app candidate is billionaire Mukesh Ambani’s Jio Platforms Ltd., a four-year-old startup with an equity value of $65 billion, including more than $15 billion recently raised from investors including Facebook Inc., KKR & Co. and Silver Lake Partners. Before Jio eventually seeks a listing on Nasdaq or the New York Stock Exchange, Ambani would probably want it ready as a carriage-content-and-commerce powerhouse for half-a-billion people.Jio’s 4G telecom service already has roughly 400 million subscribers, though they currently don’t even pay $2 a month. The trick to a $100 billion-plus initial public offering would lie in using the partnership with Facebook to introduce features such as the WeChat mini-program via the popular WhatsApp messaging service. It lets users book hotels, order taxis, explore augmented reality to try on a new L’Oreal beauty product, or test-drive a Tesla — without leaving WeChat. When it comes to building product awareness and interest, these embedded mini-apps in China are now a fourth as effective as regular online stores run by JD.com Inc. and Alibaba Group Holding Ltd., according to McKinsey & Co. They will offer brands in India a chance to sell more — and more profitably — even in remote towns. The consulting firm found that younger consumers in smaller Chinese cities give more weight to advice from social-media influencers and referrals by friends than their counterparts in larger metropolitan areas. This will probably hold true for India as well. As for the actual commerce, JioMart, Ambani’s new e-commerce platform, would take orders and — if the regulator permits it — accept payments via WhatsApp. Staples could be delivered by traditional neighborhood stores, with Jio helping connect them to buyers. For discretionary products, Ambani may use his Reliance Retail Ltd., already the country’s largest bricks-and-mortar retailer. It won’t be too hard to grease the wheels of super-app commerce with credit. Local lenders will be desperate for a new source of balance-sheet expansion after absorbing inevitable losses from the pandemic and lockdown. Still, the road to satisfied digital customers will be long and bumpy because of India’s creaky infrastructure. Keeping users hooked with novel content will therefore be crucial. Facebook is building a new version of Quest virtual reality headsets; the Silicon Valley firm is also acquiring studios that make VR games. Jio, which wants its set-top box to support online gaming, could find opportunities for collaboration.However, the main entertainment fare will still be cricket and Bollywood. Last year, Ambani promised Jio First Day First Show — movies streamed to broadband customers on the day of their theater release. With Covid-19 shutting down cinemas, producers in India need digital alternatives; audiences need their fix. Although Ambani appears to be ahead, his won’t be India’s only super-app. Amazon.com Inc. has pledged to invest $5.5 billion in the country, while Walmart Inc. has plowed in $16 billion to acquire local e-commerce leader Flipkart Online Services Pvt. Potentially, they — or Alphabet Inc.’s Google — could seek telecom and digital media partners.Western tech firms were broadly shut out of China’s digital revolution. In India, they’ll join the fray, hoping for insights that will come in handy in other emerging markets. But India will still prefer local control over the super-apps. Six hours a day of 1.3 billion people — and all the data that flows from it — is a coveted resource, something politicians won’t want slipping out of their sphere of influence. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Zacks Analyst Blog Highlights: JD.com, Tencent, Alibaba and Sohu.com
(Bloomberg) -- Traveloka, Southeast Asia’s biggest online travel startup, is close to raising fresh funds at a private-market valuation of about $2.75 billion -- roughly 17% less than its most recent fundraising, according to people familiar with the matter.The Jakarta-based firm is in advanced negotiations with new strategic investors such as Siam Commercial Bank Pcl and Richard Li’s FWD Group Ltd., as well as existing backers GIC Pte. and East Ventures to secure about $250 million, the people said, asking not to be named because the discussions are private. The primary fundraising will be at a $2.75 billion valuation, while a secondary sale will be at $2.4 billion, one of the people said. Traveloka counts online travel site Expedia Group Inc. and JD.com Inc. among its existing backers.Terms of the fundraising could still change, they said. A Traveloka representative declined to comment.Traveloka, which has had its business hammered by the coronavirus fallout, is one of the first unicorns in Southeast Asia to experience a down-round -- raising funds at a lower valuation than the previous funding round. It reflects the sharp drop in business after lockdown orders halted flights and travel. Since the outbreak, the company has cut an unspecified number of positions, including about 80 jobs in Singapore in April.The travel industry is witnessing a sharp decline in business since the spread of the coronavirus. Expedia saw its total gross booking fall 39% in the first quarter, while its share price has dropped 21% this year. Vacation-rental startup Airbnb Inc. cut 25% of its workforce and raised an additional $2 billion in debt to help weather the downturn.Despite the slump, some Traveloka investors are betting on the travel industry’s eventual recovery, led by a rebound in tourism within countries, and a series of cost-cutting measures at the company, one of the people said. In Vietnam -- a model case in containing the pandemic with fewer than 400 cases and no deaths -- domestic travel has restarted.With a population of 570 million and growing middle class, Southeast Asia’s six largest economies are expected to see their online travel market more than double from $34 billion in 2019 to $78 billion in 2025, according to the most recent report by Google, Temasek and Bain released in October.Read more: Southeast Asia’s No. 1 Travel App Jumps on Fintech BandwagonSince its inception in 2012, Traveloka’s valuation climbed to $3.3 billion, according to the people. It has expanded across Southeast Asia, making it easier for consumers to book flights and hotels across countries. Like other startups in the region, Traveloka followed a popular playbook of providing multiple products and extending into financial services to complement its travel, accommodation and lifestyle offerings.Traveloka Chief Executive Officer Ferry Unardi said in an interview at the New Economy Forum in Beijing in November that the company is considering an initial public offering in Indonesia and in the U.S. in two to three years.Traveloka Looking to Grow Into Lifestyle, Financial Services: CEO (Video)(Adds forecast of Southeast Asia’s digital market in the seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sina Corp., a Chinese social media company, has received a take-private proposal for $41 a share from an entity led by its chairman.The company said in a statement Monday that New Wave MMXV Ltd., the anglicized name of Sina, submitted a preliminary non-binding proposal letter dated Monday for a “going private” transaction. New Wave is controlled by Charles Chao, chairman and chief executive officer of Sina, according to the statement.At $41, the U.S.-listed company would be valued at about $2.7 billion, an 11.8% premium on its last closing price on Thursday.Sina operates Weibo, a Chinese equivalent of Twitter. The firm was among the first wave of Chinese internet companies to seek listings internationally at the beginning of the century. It went public on the Nasdaq in 2000, with its shares rising 174% since then. The S&P 500 Index rose 116% during the same period.With the encouragement of China’s government and to be closer to their customers, some U.S.-listed Chinese companies have reversed course and sought homecomings via Hong Kong listings in the past year. That includes Alibaba Group Holding Ltd., JD.com Inc. and NetEase Inc.Chao controls 13.5% of Sina’s ordinary shares, according to a filing. Sina said in its statement that New Wave and its beneficiaries control 58% of the voting power in the company. The acquisition, to be financed by a combination of debt and equity, will be evaluated by a special committee set up by Sina’s board, according to the statementAn investor group backed by private equity firms Warburg Pincus and General Atlantic offered in June to take private 58.com Inc., a Chinese online bulletin board akin to Craigslist, in a deal valuing the company at about $8.7 billion.Sina shares jumped as much as 10.8% on Monday after the announcement disclosing the offer. They closed at $40.54 in New York.(Updates with closing share price in eighth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Hangzhou Wahaha Group Co., one of China’s biggest drink makers, is weighing an initial public offering that could raise more than $1 billion, according to people with knowledge of the matter.A listing could come as soon as next year, the people said, asking not to be identified as the matter is private. The beverage company is working with an adviser on preparations for the share sale, and has been considering Hong Kong among potential listing venues though no final decision has been made, they said.Founded in 1987 by entrepreneur Zong Qinghou, Wahaha has grown into a food and beverage giant with products ranging from bottled water, yogurt drinks and juice to instant noodles. The company has 80 production bases and employs about 30,000 workers, according to its website. Its products are available in more than 30 countries including Canada, Singapore and the U.S., the website said.Wahaha, which literally means a “laughing child” in Chinese, has signaled its intention for a listing last year as competition in China’s food and beverage market intensified. A listing would be “the right choice” and provide Wahaha with more resources, Kelly Zong, the founder’s daughter and an executive at the company, said in an interview with the 21st Century Herald in 2019. She didn’t provide details on preparations and timing.The company joins fellow Hangzhou-based beverage firm Nongfu Spring Co. in seeking a first-time share offering. The bottled water company filed for its Hong Kong IPO in late April and plans to raise about $1 billion, people with knowledge of the matter told Bloomberg News earlier.Chinese companies have become the force behind a surge in share sales in Hong Kong after a slow first quarter. JD.com Inc. and NetEase Inc. last month raised $7 billion through second listings in the financial hub. In the first half of this year, the tech companies accounted for almost two-thirds of the city’s total fundraisings via first-time share sales, according to data compiled by Bloomberg.READ MORE: Asia Share Sales Double in Second Quarter Amid Retreat From U.S.Preparations for Wahaha’s offering are at an early stage and details including size and timing could change, the people added. A representative for Hangzhou Wahaha Group said they hadn’t received any relevant information regarding an IPO.(Updates with IPO data in sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Chinese flexible display maker Royole Corp. is weighing an initial public offering in China while its planned U.S. listing is put on hold, according to people familiar with the matter.Royole had filed confidentially for a U.S. IPO that could raise about $1 billion, Bloomberg News reported earlier this year. However, the startup is now considering a listing in China, the people said, asking not to be identified as the information is private.Considerations are at an early stage and no final decisions have been made, the people said. A representative for Royole declined to comment on the matter.Royole, known for manufacturing the world’s first commercial foldable phone, had originally planned to raise funds via a private financing round at a valuation of about $8 billion, people familiar with that deal said last year. But the Chinese company turned to the U.S. markets after liquidity tightened during a downturn in China’s venture capital sector, the people said.Since January relations between the U.S. and China have deteriorated sharply, with tensions spanning trade, technology and Hong Kong. Many U.S.-listed Chinese companies are considering second listings closer to home in Hong Kong, while China has been actively seeking to lure innovative technology companies to list in Shanghai and Shenzhen.Royole competes with Samsung Electronics Co. and BOE Technology Group Co. to produce bendable screens using cutting-edge organic light-emitting diode technology. The company, which gave away wraparound-screen hats at the 2018 World Cup in Russia, in January unveiled a smart speaker that packs a bendable display around a cylinder.Its full line of products encompasses head-mounted displays intended for use as so-called mobile theaters and other wearable flexible displays. The company even has a smart writing pad that it sells on Amazon.com, JD.com and in stores globally.Royole’s earlier investors include Knight Capital, IDG Capital, Poly Capital Management, AMTD Group, the funds of Chinese tycoon Xie Zhikun and the venture capital arm of the Shenzhen city government.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Colin Huang’s ascent is one for the history books: In just six months, his fortune swelled by $25 billion -- one of the biggest gains among the world’s richest people.His Pinduoduo Inc., a Groupon-like shopping app he founded in 2015, has become China’s third-largest e-commerce platform, with a market value of more than $100 billion. In the first quarter, as the coronavirus pandemic caused most of the nation’s economy to grind to a halt, PDD’s active users surged 68% and revenue jumped 44%, the company said in May.Now Huang, who has overseen the firm as its American depositary receipts have more than quadrupled in less than two years, has stepped down as chief executive officer.At one point, his net worth climbed as high as $45 billion, placing him just behind China’s wealthiest people -- Tencent Holdings Ltd.’s Pony Ma and Alibaba Group Holding Ltd.’s Jack Ma -- on the Bloomberg Billionaires Index. That’s even as PDD continued to post losses, primarily because it chases growth with the help of generous subsidies and has been known to spend more on marketing than it earns in sales.“Pinduoduo was perfectly positioned for people being stuck at home,” said Tom Ronk, CEO of Century Pacific Investments in Newport, California.Huang, who controlled 43.3% of PDD shares, has reduced his stake to 29.4%, according to a June 30 regulatory filing. His fortune now stands at $30 billion.That excludes a $2.4 billion charitable holding that he shares with PDD’s founding team, and $7.9 billion that went to Pinduoduo Partnership, of which Huang and newly named CEO Lei Chen are members. The partnership will help fund science research and management incentives, according to a letter following Huang’s resignation. The wealth estimate also excludes $3.9 billion that people familiar with the matter said was transferred to an angel investor.PDD declined to comment on Huang’s holdings or net worth.Facing ChallengesHe will remain chairman and work on the company’s long-term strategy and corporate structure to help drive the future of the e-commerce giant, PDD said.“PDD is still facing some high-level challenges in product supply, relationship with brand merchants, logistics and payments,” said Shawn Yang, an analyst at Blue Lotus Capital Advisors. “Colin may want to focus more on these issues.”PDD’s success hinges on deals, which have become particularly popular with customers looking for bargains as the world’s second-largest economy slows. Most of its users come from smaller Chinese cities, and the app gives them extra discounts when they recommend a product through social networks and get friends to buy the same item.Fen Liu, a homemaker in Quanzhou, a provincial city in Fujian, said she accrued enough coupons with her friends’ help to reduce the price of a suitcase to zero.“I couldn’t believe my eyes when I saw my suitcase arrive in the mail,” she said. “It’s made me a loyal Pinduoduo user ever since.”‘Bargain Hunters’While PDD’s aggressive price-reduction strategies have helped win over people with lower incomes, they may stifle the company’s efforts to attract wealthier consumers, according to Charlie Chen and Veronica Shen, analysts at China Renaissance Securities in Hong Kong.“PDD’s users are largely bargain hunters reluctant to buy large-ticket items,” they wrote in a June 29 note, adding that the company’s image remains a key obstacle to users spending more. “We believe PDD is working to change its low-price brand image -- but this could be costly.”That may require heavy marketing and hurt margins further despite a strong user-base foundation for future growth, the analysts said. And PDD’s management has offered no clear path to profitability.Last year, the company’s “10 Billion RMB Subsidies” campaign, which is ongoing, led to a $2 billion increase in sales and marketing expenses to $3.9 billion, and those costs have been at 90% to 120% of revenue for the past two quarters, China Renaissance said.For the nation’s June 18 shopping festival, PDD provided a subsidy program with no cap across different product categories to push spending and attract more users. Other fast-growing Chinese startups -- including rival Meituan Dianping, ride-hailing app DiDi Chuxing and Starbucks Corp. competitor Luckin Coffee Inc. -- have also adopted subsidies strategies to maintain customer loyalty.Huang, 40, grew up in the eastern city of Hangzhou, where Alibaba has its headquarters. After receiving a degree at Zhejiang University, he went to the University of Wisconsin for a master’s in computer science. He began his career at Google in 2004 as a software engineer and returned to China in 2006 to help establish its operations in the country.He then became a serial entrepreneur. He started his first company in 2007, an e-commerce website called Ouku.com that he sold three years later after realizing it was too similar to thousands of others. He then launched Leqi, which helped companies market their services on websites like Alibaba’s Taobao or JD.com Inc., and a gaming firm that let users play on Tencent’s messaging app WeChat. Both took off and Huang found himself “financially free,” according to a 2017 interview.After getting an ear infection, he decided to retire in 2013 at age 33. But following a year of pondering what to do with his life -- he contemplated starting a hedge fund and moving to the U.S. -- he came up with the idea of combining e-commerce and social media. At the time, Alibaba dominated the online business, and WeChat became a must-have application on smartphones in China.The tables have turned since. In 2018, Alibaba launched a PDD-style app in an attempt to lure smaller-town users with bargains. It came months before Huang took his company public in New York, raising $1.63 billion in its July 2018 initial public offering. Since then, PDD has surged 389%, while Alibaba has gained just 13%.In 2017, Huang had said he was unlikely to spend the rest of his life at PDD. While he’s still chairman of the company, he now wants to give more responsibility to younger colleagues to keep the entrepreneurial spirit as PDD matures, he wrote in a letter to employees.“We envision Pinduoduo to be an organization that creates value for the public rather than being a showoff trophy for a few or carry too much personal color,” Huang said. “This will allow Pinduoduo to continually evolve with or without us one day.”(Updates PDD, Alibaba moves in 22nd paragraph. A previous version of this story corrected Fen Liu’s location.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Alibaba Group Holding Ltd. and JD.com Inc. handled record sales of $136 billion during the country’s biggest online shopping gala of the post-pandemic era, suggesting China’s nascent consumer spending recovery has legs.The twin e-commerce giants put nationwide consumption to its first major test since the pandemic with the annual “6.18” summer extravaganza that concluded Thursday. Transactions across JD’s online platforms during the 18-day marathon leapt 34% to 269.2 billion yuan ($38 billion), a faster pace than in 2019. And Alibaba said it handled 698.2 billion yuan during its own campaign, without a year-earlier comparison. JD’s shares stood largely unchanged after rising 3.5% in their Hong Kong debut.China’s largest retailers counted on pent-up demand during the event -- created by JD to commemorate its June 18 founding anniversary -- to make up for lost sales during a coronavirus-stricken March quarter. Global brands and smaller merchants alike stocked up on goods for months in anticipation of an online bargain spree surpassed only by the Nov. 11 Singles’ Day in scale. The final tally underscored how hundreds of millions of shoppers remain willing to spend after the world’s No. 2 economy contracted for the first time in decades, especially given huge discounts as Covid-19 shifted buying to the internet.“The strong GMV at 6.18 will help to dispel market anxiety about virus-related disruptions,” Bloomberg Intelligence analyst Vey-Sern Ling said. “Chinese e-commerce platforms will probably deliver strong 2Q sales and profit recovery due to pent-up consumer demand and an accelerated shift to digital consumption channels driven by the virus.”This year’s deals-fest culminated with the biggest bargains Thursday and featured more generous subsidies than ever before, as well as an unprecedented cohort of live-streaming personalities. Competition also intensified with the likes of ByteDance Ltd. and Kuaishou -- whose video app now sells JD goods -- vying for buyers.“Chinese and foreign brands had sluggish sales due to the pandemic, and 6.18 has become their most important opportunity in the first half,” JD Retail Chief Executive Officer Xu Lei said in an interview with Bloomberg Television. For discretionary items like home appliances, “we’ve seen a recovery in consumption.”Read more: Chinese Shoppers Can Go Out Again. Online Buys Show They Won’tChinese retail suffered a record collapse in the first three months of 2020. While it’s on the mend, latest data shows private consumption still sluggish, dashing hopes of a V-shaped recovery as people head back to work. The picture is complicated by the fact that Covid-19 has kept people away from stores and shifted an unknown proportion of retail activity online, propping up online purchases.JD has projected revenue growth of 20% to 30% this quarter. Xu -- widely viewed as the front-runner to succeed billionaire founder Richard Liu -- says JD is on track to meet that goal and isn’t threatened by competitors encroaching upon its turf, like in consumer gadgets.“I don’t dance with them, I dance with users,” he said.Signs had grown this month that China’s e-commerce giants were on track for record sums as measured by gross merchandise value, or total value of goods sold. During the first ten hours of its 6.18 campaign, Alibaba’s Tmall business-to-consumer marketplace logged sales 50% higher than during the same period last year, after participating brands doubled. JD has said sales of imports like HP laptops and Dyson hairdryers soared, while it’s selling more fresh produce in smaller cities.Read more: JD’s Outlook Beats After E-Commerce Surges in China LockdownInitiated in 2014 as a riposte to Alibaba’s Singles’ Day, 6.18 has become yet another annual ritual for e-commerce companies and their offline partners from Walmart Inc. to Suning.com Co. Beyond headline figures, it’s less clear how much it contributes to the bottom line given the enormous discounting involved.“The result is good as far as growth is concerned, but in terms of margins, all the players will see the consequences,” said Steven Zhu, analyst at Pacific Epoch. “It’s just what I call paid-GMV for all the platforms. It’s the time that people have to have a good number after the coronavirus, so they just do it at whatever the cost.”Alibaba, along with brands on its platforms, committed cash and other coupons worth a total of 14 billion yuan, according to the company. JD said it offered 10 billion yuan in subsidies.“User growth and retention, and the digitization of brands and merchants are key considerations” when Alibaba pushes subsidies during promotions like 6.18, said Alibaba Vice President Mike Gu, who heads Tmall’s fashion and consumer goods businesses.Read more: Alibaba Drops After Projecting Slowing Growth in Uncertain TimesMore broadly, sales of fast-moving consumer goods on the Tmall and Taobao marketplaces in the June quarter have so far exceeded the pace of 2019’s final quarter, Gu said in an interview. Thanks to 6.18, apparel growth this month has also climbed back to pre-Covid-19 levels, he added.Live-streaming is also playing a bigger role during this year’s 6.18, at a time Covid-19 is fueling an unprecedented boom in online media. Alibaba’s Taobao Live championed the use of influencers to sell everything from lipstick to rockets, prompting rivals like JD and Pinduoduo Inc. to follow suit.Social media companies like TikTok-owner ByteDance and Tencent Holdings Ltd.-backed Kuaishou are jumping on the bandwagon. Their mini-video platforms in China have lured a long list of tech chieftains hawking products of their own to live-streaming fans: The latest was NetEase Inc.’s usually reclusive founder, William Ding. Last week, his debut on Kuaishou amassed 72 million yuan of sales in just four hours.“I’ve never eaten beef jerky as tasty as this in the last twenty years,” the billionaire said during the livestream.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Chinese e-commerce giant JD.com’s shares rose 5.7% after opening at HKD $239 (about USD $30.80) during their first day of trading on the Hong Kong stock exchange. JD.com had originally priced the shares for the secondary offering at $226. JD.com issued 133 million new Class A ordinary shares as part of the secondary offering and said it expects its net proceeds to be about HKD 30.05 billion (or about $3.9 billion).
(Bloomberg) -- JD.com Inc. soared about 6% in its Thursday debut in Hong Kong, a solid start that underscores strong investor appetite for a growing line-up of Chinese tech giants seeking to list closer to home.The Chinese online retailer, which already has stock listed in the U.S., opened at HK$239 after raising $3.9 billion in its Hong Kong share sale. That’s after its shares changed hands in gray markets at a roughly 5% premium to its HK$226 listing price in the days prior.JD debuts as tensions between Washington and Beijing threaten to curtail Chinese companies’ access to U.S. capital markets, particularly after once high-flying Luckin Coffee Inc. crashed amid an accounting scandal. It’s a victory for Hong Kong, coming on the heels of Alibaba Group Holding Ltd.’s $13 billion share sale and the passing of a national security law that critics fear could jeopardize its status as a financial hub. Fellow internet giant NetEase Inc. gained 6% in its own Hong Kong coming-out party last week.“We hope investors from China and Asia can better understand JD’s concept, service and future development,” JD Retail Chief Executive Officer Xu Lei told Bloomberg Television. “Hong Kong is one of the freest economies in the world. We hope to have many mature institutional and individual investors share JD’s growth.”Read more: Alibaba, JD Test Virus Recovery With Online Sales ExtravaganzaJD and its rivals will now put China’s nascent consumer spending recovery to the test when they wrap up the country’s biggest online shopping gala of the post-pandemic era. China’s largest retailers are hoping the “6.18” or June 18 extravaganza that began this month unleashed pent-up demand, making up for lost sales during a coronavirus-stricken March quarter.Global brands and smaller merchants alike stocked up on goods for months in anticipation of the summer event, a bargains buffet surpassed only by the Nov. 11 Singles’ Day in scale. JD and Alibaba are expected to release final results of their haul after midnight.Longer term, the company will use the proceeds of the stock sale to continue building its logistics and delivery network, a key advantage during the pandemic because JD could better control shipping.“The process to build up a supply chain is very time consuming and cost consuming, but we want to make it better,” Xu said. “When we have better supply chain, it would bring in a better user experience.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Institutional investors are bidding for JD.com’s Hong Kong shares before this week’s debut at slightly more than the listing price.Some institutional investors have bid to buy the Chinese e-commerce company’s shares at between HK$226.10 to HK$237 apiece in gray market trading Wednesday, according to people familiar with the matter. That represents a premium of as much as 4.9% compared to the listing price of HK$226. Brokers quoted offers to sell the shares at between HK$239 and HK$245 each, the people said.JD.com, which went public on Nasdaq in 2014, is expected to start trading in Hong Kong on June 18. The stock rose 2.5% in U.S. trading on Tuesday. Traders will be able to short the stock immediately after its debut, as well as hedge with futures and options, according to the Hong Kong exchange operator.JD.com raised $3.9 billion last week selling 133 million new shares in Hong Kong in the second-biggest listing of the year, part of a wave of Chinese companies that are fleeing the U.S. and seeking secondary listings in the city.Last week, internet gaming company NetEase Inc. began trading in the city, with the Hong Kong-listed shares now up 4.1% from the offer price after an initial pop on its first day of trading. Prior to listing, it also drew a small premium on the gray market.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
JD.com (NASDAQ:JD) has had a great run on the share market with its stock up by a significant 51% over the last three...
(Bloomberg Opinion) -- The two archrivals of Asian finance have competed so intensely for so long that it’s impossible to believe that Hong Kong’s fading autonomy and the resumption of anti-government protests isn’t filling Singapore with even a little bit of schadenfreude. It was a surprise, therefore, to see the Monetary Authority of Singapore rebut news reports that there had been large flows of deposits from Hong Kong. The MAS was responding to data that showed a near-fourfold jump in one corner of the Singapore banking system’s foreign-currency deposits over the past year:The central bank has a valid objection. The above chart only shows foreign-currency deposits in domestic banking units (DBUs). Include deposits in the the Asian currency units (ACUs), a fancy name for a different set of ledgers that the same banks use for their international business, and the fourfold growth turns out to be a 20% increase, to S$781 billion ($564 billion). Not exactly a deluge, though perhaps more than a puddle of rainwater on Singapore’s Orchard Road:There are plenty of reasons why deposits are rising, and not just in Singapore. Central banks everywhere are flooding lenders with liquidity to ease the pain of the coronavirus pandemic. Governments are putting money into people’s accounts, while cautious firms are stuffing theirs by drawing on previously unused working-capital lines.Besides, if deposits are fleeing Hong Kong, then banks in the territory must be feeling the pinch? That doesn’t seem to be the case: It was only in late May that China said that it would impose a national security law in Hong Kong. April data may not be capturing the gloom about Hong Kong’s future. Still, the immediate challenge for the special administrative region is capital inflows, which are forcing the monetary authority to buy billions of U.S. dollars to prevent the Hong Kong dollar from strengthening beyond 7.75, the outer boundary of the 7.75-7.85 range in which it is allowed to trade against the greenback. Money is pouring in because Hong Kong dollar interest rates are higher than U.S. dollar rates, and also because JD.com Inc., China’s No. 2 online retailer, is selling shares in the city in what’s likely to be the world’s second-biggest initial public offering this year.A few mainland companies that no longer feel welcome in U.S. capital markets won’t be Hong Kong’s ticket to perennial preeminence. However, if the territory does bleed deposits, will Singapore want them? The two-ledger system, the reason for confusion about capital inflows, has its roots in the rivalry. In 1968, when founding prime minister Lee Kuan Yew decided to turn his tin- and rubber-exporting port into an international financial center, he had no real advantage over Hong Kong, then a British colony. But the devaluation of the pound in 1967 created demand for dollars in Asia, and Singapore grabbed the chance with the help of Dick van Oenen, a Dutch currency trader at Bank of America. Hong Kong, reluctant to admit new banks, took almost a decade to catch up. It was hesitant initially to host an offshore finance hub because those, like casinos, are best left to places that don’t have much other activity to protect. Singapore insulated its domestic economy from instability thanks to the different domestic and international ledger units, which demarcated banks’ high-stakes global commerce from their more humdrum local franchise. For five years now, authorities have been planning to end the divide, and in January parliament approved the merger of the two accounts. Since regulatory scrutiny of financial intermediaries has gone up in all the major economies from which Singapore hosts its foreign banks, there’s little point in continuing with a dual-track system. Even so, this chart should give the authorities pause:From roughly similar levels in 1991, deposits in Singapore — across both the ledgers, and including all currencies — have risen to $1 trillion, while Hong Kong’s have exploded to $1.8 trillion because of its outsize role in securing capital for Chinese firms. Singapore may have the competence and confidence to ensure that banks can backstop their IOUs, with or without help from their home countries. But will the regulators be comfortable if the state investment firm Temasek Holdings Pte. — the largest shareholder of both London-based Standard Chartered Plc and homegrown DBS Group Holdings Ltd.— sees value in combining the two banks, an idea that’s been doing the rounds for the better part of two decades, though never seriously entertained? Such a merger would give Singapore an institution at least half as big by deposit size as HSBC Holdings Plc, the gorilla of Hong Kong banking:But size isn’t everything. Deposits come from loans, and too much credit causes “financialization.” It’s a term economists use to describe situations in which a society sacrifices other priorities — such as manufacturing competitiveness, affordable housing and less leveraged firms — for a mirage of affluence.Singapore’s planners know that unlike London, New York or Hong Kong, which sits at the mouth of China’s planned Greater Bay Area, their island nation doesn’t have a hinterland to accommodate the losers of financialization.Orbigood, a Singaporean exclamation for others getting their comeuppance, is best kept for its rival’s cramped housing and noxious air. Singapore wouldn’t really want deposits to rush in from Hong Kong. It might do more harm than good. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- China’s No. 2 online retailer JD.com Inc. raised HK$30.1 billion ($3.9 billion) in its Hong Kong share sale, people familiar with the matter said, cementing the world’s second-biggest listing this year.The company priced 133 million new shares at HK$226 each, according to the people, asking not to be identified as the information isn’t public. The price represents a 3.9% discount to the Nasdaq-listed JD’s closing price of $60.70 per share on Wednesday. JD trades in the U.S. via American depositary receipts, one of which represents two ordinary shares.JD’s shares are slated to begin trading in Hong Kong on June 18, which coincides with its largest annual online sales event. A representative for the company declined to comment.At $3.9 billion, JD’s Hong Kong share sale is this year’s second-largest globally, after Beijing-Shanghai High Speed Railway raised $4.3 billion in January, according to data compiled by Bloomberg. First-time share sales slowed worldwide earlier this year as the coronavirus caused markets to slump and issuers put their listing plans on hold. But activity has been roaring back recently, and last week was the busiest for IPOs in 2020.NetEase Inc., China’s biggest gaming company after Tencent Holdings Ltd., delivered a solid debut in Hong Kong on Thursday, which bodes well for a growing line-up of Chinese tech giants looking to list closer to home. NetEase soared as much as 9.9%.Read more: NetEase Rally Bodes Well for Speculators in Chinese Mega DealsEscalating tensions between Washington and Beijing are increasing risks for Chinese companies like JD and NetEase that are seeking to broaden their investor base. Washington has threatened to curtail Chinese companies’ access to U.S. capital markets and promised tougher oversight of their financial reporting, particularly after once high-flying Luckin Coffee Inc. crashed amid an accounting scandal. There have also been fears over the impact of national security legislation set to be imposed on Hong Kong, which has seen the resumption of protests in the city.The listings of JD and NetEase follow Alibaba Group Holding Ltd.’s $13 billion stock sale in the city last year. Hong Kong lost many of the largest tech corporations to U.S. bourses because it didn’t allow dual-class share voting at the time -- a requirement that has since been relaxed.Bank of America Corp., UBS Group AG and CLSA Ltd. are joint sponsors of JD’s Hong Kong share sale.(Updates throughout after the deal is priced.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- One of Hong Kong’s most popular investment strategies -- borrow big and plow the money into a red-hot share sale -- is starting to work, just as the city prepares to host a flurry of Chinese listings.NetEase Inc. jumped as much as 9.9% in Hong Kong Thursday, on track to deliver the city’s best trading debut in more than a year for companies with a fund raising size of more than $1 billion. The retail portion of its share sale was more than 130 times oversubscribed, as mom-and-pop traders clamoured to get a piece of the Chinese gaming company. JD.com Inc.’s planned $3.9 billion share sale, which would be the world’s second-largest of the year, is also oversubscribed. China Bohai Bank Co. is planning to launch its own $2 billion offering.Such listings are reviving interest in Hong Kong’s market, boosting inflows and helping strengthen the local dollar at a time when the passing of a national security law has raised concerns about the city’s status as a financial hub. Tensions between Washington and Beijing have threatened to curtail Chinese companies’ access to U.S. capital markets, making such secondary listings closer to home more appealing.“Introducing another technology giant to Hong Kong is definitely good for market sentiment,” said Banny Lam, managing director at CEB International Corp. “It will help Hong Kong to attract more longer-term investors and demand for future listings like JD.com will be boosted since the investment now looks very profitable.”Trading as high as HK$135.2 ($17.4) per share in Hong Kong at their highest intraday level, NetEase shares were valued at about a 3% premium to those listed on the Nasdaq -- which are near a record high. One U.S. share is equivalent to 25 Hong Kong stocks. Alibaba Group Holding Ltd. rose 6.6% on its Hong Kong debut.The prospect of NetEase potentially joining the benchmark Hang Seng Index is also helping buoy investors’ confidence, Lam said. The company’s market cap exceeds that of 39 firms on the 50-member gauge, including the likes of CNOOC Ltd. and Sun Hung Kai Properties Ltd., according to data compiled by Bloomberg.The technology sector saw strong gains on Thursday. Shopping platform Meituan Dianping added 4.1% to hit a record high, while Tencent Holdings Ltd. rose to its highest since March 2018.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Chinese e-commerce retailer JD.com has priced its shares at HK$226 ($29.16) each and raised about $3.87 billion in its Hong Kong secondary listing, according to two people with direct knowledge of the matter. The listing, the biggest in the city this year, comes as Chinese companies are putting off plans for U.S. listings amid mounting tensions between the world's top two economies, while those listed in New York are seeking to return to exchanges closer to home. Under the terms of the deal, one of JD.com's American depository shares will be equal to two Hong Kong shares.
(Bloomberg) -- NetEase Inc. soared more than 9% at the start of its first day of trading in Hong Kong, a solid debut that bodes well for a growing line-up of Chinese tech giants seeking to list closer to home.Shares in China’s biggest gaming company after Tencent Holdings Ltd. opened at HK$133. That’s after NetEase’s shares changed hands at a roughly 2% to 3% premium to its HK$123 listing price in the days prior.NetEase makes its debut in Hong Kong as tensions between Washington and Beijing threaten to curtail Chinese companies’ access to U.S. capital markets, particularly after once high-flying Luckin Coffee Inc. crashed amid an accounting scandal. It’s a victory for Hong Kong, coming on the heels of Alibaba Group Holding Ltd.’s $13 billion share sale and the passing of a national security law that critics fear could jeopardize its status as a financial hub.No. 2 Chinese online retailer JD.com Inc. is expected to debut June 18. The twin internet giants are expected to usher in a wave of other Chinese firms who seek capital to bounce back from the coronavirus pandemic and fuel longer-term expansion.NetEase -- a distant second to Tencent in the world’s largest video game market -- is looking globally for the next chapter of growth, teaming up with Japan’s Studio Ghibli and investing in Canadian game creator Behaviour Interactive. After selling its cross-border e-commerce platform Kaola to Alibaba, the 22-year-old company has shifted its focus to music streaming and online learning, despite worsening competition in these areas.The creator of popular franchises like Fantasy Westward Journey and Onmyoji reported a 14% rise in online games revenue for the coronavirus-stricken March quarter, less than half of the pace Tencent’s gaming division managed during the same period.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Bankers hoping for a bonanza from Hong Kong share sales by U.S.-listed Chinese companies should contain their excitement. Low fees and the hangover of the Luckin Coffee Inc. scandal are likely to put a damper on the rewards.Hong Kong’s market for stock offerings is booming. Online retailer JD.com Inc. is raising as much as $4.1 billion in the world’s second-biggest share sale this year, days after internet gaming company NetEase Inc.’s $2.7 billion listing. There’s a line of candidates for Hong Kong flotations, driven by the prospect that the U.S. will delist companies that can’t commit to proving they are free from foreign government control.That’s a boon for the city and its stock-exchange operator, after China’s plans to impose a national security law raised questions over Hong Kong’s future as an international financial center. The NetEase and JD.com offerings were both heavily oversubscribed by retail and institutional investors, showing the strength of demand for U.S.-traded Chinese tech companies. These and upcoming deals may not deliver the windfall to investment bankers that such a pipeline would usually promise, though.For one thing, secondary listings earn a lot less in fees than initial public offerings. NetEase is paying the banks that worked on its Hong Kong flotation just 0.25% of the proceeds, compared with a standard rate for IPOs of 2% to 3%, as my colleague Julia Fioretti notes. Such deals earn less because the companies are already listed, meaning less work is required from banks to introduce their businesses to investors.Secondly, not all companies eligible to sell shares in Hong Kong can be expected do so. There are 42 Chinese companies in the U.S. that qualify for Hong Kong secondary listings, according to analysts at UBS Group AG. Should they issue 5% of their stock over the next 12 months, that would mean $27 billion in funds raised. The actual amount may come in far short of that. Blame the fall of Luckin, the Starbucks competitor that faces delisting from Nasdaq after acknowledging that it fabricated sales. The episode has damaged the reputation of Chinese companies overseas and is having a cautionary impact on investors, banks and potential listing candidates.Unlike Hong Kong, the U.S. market has a disclosure-based system that makes listing — and delisting — easier. Investors subject to corporate fraud can seek redress through class-action lawsuits (Luckin and its IPO arranger, Credit Suisse Group AG, have both been sued). Lacking such legal safeguards, Hong Kong has a gatekeeper for its market, with regulators vetting listing candidates. Companies and their sponsoring banks need to factor in this added scrutiny.As for investors, they may feel they’ve already had the pick of the U.S.-listed Chinese contingent. Alibaba Group Holding Ltd., the first to sell shares in November, JD.com and NetEase are three of the four biggest by market capitalization (the other is Pinduoduo Inc.). They are all well known and with track records as listed companies stretching back years. As the list goes down to encompass smaller and lesser-known enterprises, investor enthusiasm may wane.Not all businesses can match the excitement of the tech trio. Will investors flock to Yum China Holdings Inc., operator of KFC outlets in the country, for example? American investors have taken to Yum, which has the highest percentage of U.S. institutional ownership among the group. This investor base may be unwilling to switch to Hong Kong shares, a factor that may affect demand and post-listing liquidity.Then there’s online travel agency Trip.com Group Ltd., also on the roster of upcoming secondary listings. It has the technology sheen, but will investors be able to overlook the hammering that the world’s tourism companies have taken from the coronavirus pandemic?The reality is that while secondary listings are good business, “there are bigger opportunities in other products for investment banks in the region,” according to Amrit Shahani, London-based research director at analytics company Coalition Development Ltd. First-quarter IPO fees for the top 12 investment banks that Coalition follows in the region, from Goldman Sachs Group Inc. to Citigroup Inc., were around $150 million, Shahani said; they made a combined $1.5 billion from foreign-exchange trading during the period.So things are looking up after all. Just not in the place you might expect. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
JD.com, Inc. (JD) is at a 52-week high, but can investors hope for more gains in the future? We take a look at the company's fundamentals for clues.
(Bloomberg) -- China’s No. 2 online retailer JD.com Inc.’s Hong Kong share sale of as much as $4.1 billion is multiple times oversubscribed by institutional investors, people familiar with the matter said, as the financial hub enters a second week of multi billion dollar stock offerings.JD’s offering is set to be the world’s second-biggest this year and comes on the heels of Chinese Internet company NetEase Inc.’s $2.7 billion Hong Kong share sale last week. After a muted start to the year in terms of initial public offerings due to the coronavirus pandemic and volatile markets, Hong Kong is roaring back to life with a slew of stock offerings.The highly sought after share sales have helped drive a surge of capital inflows, with the city’s currency climbing to the strong end of its permitted trading band late last week even as concern about looming national security legislation has spurred speculation about outflows. The planned national security legislation to be imposed on Hong Kong as well as the resumption of protests had fanned concerns about the city’s future as a leading financial hub, even as the head of its stock exchange brushed away such fears.Prior to NetEase last week, just $3.5 billion had been raised through IPOs in Hong Kong, which was the world’s busiest listing venue last year. This week is set to beat that tally easily with JD, which is due to price on Thursday U.S. time, while China Bohai Bank Co. is planning to launch its own $2 billion IPO later in the week. Escalating tensions between Washington and Beijing are increasing risks for Chinese companies like JD and NetEase that are seeking to broaden their investor base. Their Hong Kong listings follow Alibaba Group Holding Ltd.’s $13 billion stock sale last year, hailed as a homecoming for Chinese companies and a win for the Hong Kong stock exchange. The city lost many of the largest tech corporations to U.S. bourses because it didn’t allow dual-class share voting at the time -- a requirement that’s since been relaxed.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.