468.99 0.00 (0.00%)
After hours: 4:46PM EDT
|Bid||463.01 x 1000|
|Ask||468.95 x 800|
|Day's range||463.93 - 471.87|
|52-week range||209.01 - 503.27|
|Beta (5Y monthly)||0.74|
|PE ratio (TTM)||70.32|
|Forward dividend & yield||4.64 (1.01%)|
|Ex-dividend date||11 Jun 2020|
|1y target est||N/A|
Standard Chartered has warned it faces an increasing risk of being caught in the crossfire of escalating geopolitical tensions between the US and China, as its quarterly loan-loss provisions more than tripled due to the impact of the coronavirus pandemic across Asia. Executives at the emerging markets-focused lender said they were seeking legal opinions and regulatory guidance on how to deal with the conflict. “Relations between the US and China remain highly charged, driven by both economic and political considerations,” said José Viñals, chairman of StanChart.
Standard Chartered chief Bill Winters is proving he has a better a handle on the bank’s balance sheet than predecessors. Mr Winters still has a long way to go to convince detractors. StanChart’s presence in such fast-growing places as south-east Asia and India played a part.
(Bloomberg) -- When the coronavirus put a halt on people’s lives in China in February, Justin Jin’s old university classmates thought about selling face masks to make money. The 21-year-old suggested they instead try their luck with two stocks: Tesla Inc. and Tencent Holdings Ltd.That’s when Jin’s two friends began using the Futubull app, one of the Chinese platforms that allow mainland investors to buy foreign equities. The decision paid off. Both stocks soared as part of a global rally that has enticed a wave of novice investors.“When I first started, there were only three or four friends who used Futu,” Jin said. “Now there are at least three or four dozen.”Thanks to them and many others, Futu Holdings Ltd., a Chinese online brokerage and wealth-management platform, now counts more than 1 million registered users, a 23% increase from the first quarter. Its American depositary receipts have almost quadrupled since a low in March, propelling the fortune of its founder and chairman, Leaf Hua Li, to $1.5 billion, according to the Bloomberg Billionaires Index.Tencent EmployeeLi, 43, was Tencent’s 18th founding employee and left to start Futu after growing frustrated with the software he used to trade Hong Kong stocks, according to a CapitalWatch interview in January. The online broker, backed by the Chinese internet giant, was formally incorporated under Hong Kong law in April 2012. Li owns 40% of its outstanding shares.A company spokesman declined to comment on Li’s net worth.Retail investors have always been a driving force in China’s stock market, but with the pandemic keeping people home, more amateur traders have emerged. Futu reported a 60% surge in new paying clients -- those with assets in their trading accounts -- in the first quarter, with much of it coming from Hong Kong. Big-name stocks like Tencent, Tesla and Alibaba Group Holding Ltd. fueled the surge during the peak of China’s coronavirus crisis in February, according to a statement.One of Futu’s main draws is that, unlike mainland competitors, it has licenses that allow users to go beyond the domestic market and buy equities from the U.S. and Hong Kong. This year’s high-profile secondary listings in the city from JD.com Inc. and NetEase Inc. have enticed more investors, as has the months-long rebound in U.S. stocks, according to Bank of China International analyst Nanyang He.“Futu has benefited from strong market sentiments in terms of raising trading velocity and increasing IPO subscription revenue,” He said.Shares SurgeFutu shares have risen 148% since the company listed in New York in March 2019, outpacing rival Up Fintech Holding Ltd., which went public the same month.While the competition is rife -- Chinese brokerage firm Huatai Securities Co. just launched its own U.S. stock-trading app -- Futu is betting on the increasing number of Chinese citizens looking to diversify their investments globally, He said. The company started a series of MSCI index futures products this month.Li began his career at Tencent after receiving a bachelor’s degree in computer science and technology from Hunan University in 2000. He was an early researcher of the QQ messaging software and founded Tencent Video, now one of the largest video-streaming platforms in China.Li credits his time at Tencent for building his business acumen and said he was inspired by the company’s founders, Pony Ma and Zhang Zhidong, according to the CapitalWatch interview. Tencent remains Futu’s largest institutional backer, and several of its employees were key in helping the online broker grow over the past decade.Still, Li hopes he’ll ultimately be defined by his legacy at Futu.“For a long time, people wondered why I left Tencent at its peak of growth,” Li said in the interview. “Now that Futu has made it, the weight of importance has changed.”(Updates share move since IPO in 10th 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) -- Saudi Arabia suffered a simultaneous decline in oil and non-oil revenue as the global pandemic combined with lower energy prices to jolt the kingdom’s public finances.Oil revenue was down 45% in the second quarter from the same period last year to 95.7 billion riyals ($25.5 billion), according to budget data released by the Finance Ministry on Tuesday. Non-oil revenue drawn from sources like taxes and fees declined by 55%.The deficit more than tripled from the first quarter to 109.2 billion riyals even though authorities cut spending by 17% compared with a year earlier.“A widening in the deficit was expected with the Covid-19 development, both on the income and non-income side,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “The government has been proactive with the austerity measures they’ve introduced. Oil revenue will be critical for reducing the fiscal shortfall.”Facing a twin crisis from the coronavirus pandemic and oil market turmoil, the government has taken unprecedented measures to steady its finances, including tripling value-added tax, increasing import fees, and canceling some benefits for government workers. Some economists say the budget deficit could widen to 15% of gross domestic product this year, comparable to the levels it reached after the last oil rout of 2014.But Finance Minister Mohammed Al Jadaan has said the world’s largest oil exporter “is not in austerity” and described changes in spending as a reallocation in outlays.“Although recent fiscal measures should help limit the kingdom’s fiscal financing requirements in the second half, we expect a full year fiscal deficit of 10.9% of GDP,” said Bilal Khan, head of economic research for the Middle East, North Africa and Pakistan at Standard Chartered Plc in Dubai.Also on Tuesday, Saudi Arabia’s central bank released a report showing that its net foreign assets had declined by 0.4% in June, reaching 1.66 trillion riyals ($443 billion). That’s the lowest level since 2010.Other key points from the new budget data include:The budget shortfall in the first half of the year was equivalent to nearly 77% of the government’s full-year deficit targetThe biggest spending cut came from capital expenditures, which fell by 52% in the second quarter year-on-year, followed by spending on social benefits with a drop of 48%Spending on the compensation of government employees declined 4% in the second quarter as officials continue to try to trim the public sector wage billA spending breakdown by sector for the first half of the year showed that military spending -- the largest budget item after education -- declined by 8% compared with the same period last yearSpending on a category labeled “health and social development” fell by 22% in the first half -- though the government noted that expenditure on health services alone increased by 24% during the same period, as authorities expanded health care outlays during the pandemic(Updates with central bank data on net foreign assets in 8th 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.
When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") below 17x, you may...
(Bloomberg) -- A new index focused on China’s technology giants is set to give investors greater access to their growing dominance in Hong Kong’s market.The Hang Seng Tech Index, which launched Monday with backdated prices, tracks the 30 largest tech companies listed in the city, including Tencent Holdings Ltd., Alibaba Group Holding Ltd., Meituan Dianping and Xiaomi Corp. Tracking the gauge this year would have returned 44% for investors, versus a loss of 13% for the Hang Seng Index. The tech measure fell 1.3% Monday.“All the conditions are now ready for large China tech stocks whether in China or already listed elsewhere,” Vincent Kwan, chief executive officer of index compiler Hang Seng Indexes Co., said on Bloomberg Television Monday.The move comes at a time when further listings of Chinese technology firms are in the pipeline, such as Jack Ma’s Ant Group, following those of NetEase Inc. and JD.com Inc. Listing closer to home has become more attractive as tensions between Washington and Beijing threaten to curtail Chinese companies’ access to U.S. capital markets.The compiler of the Hang Seng Index has already embraced change through moves such as scrapping a weighting limit for dual-class shares on some of its gauges. The tech index is seen helping investors bridge a gap between a Hong Kong benchmark overstuffed with old economy banks and insurers, and the technology companies that have emerged as big winners in the city’s beaten-down market.“There are too many laggards in the Hang Seng Index,” said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong. “With overseas-listed Chinese firms deciding to list closer-to-home, the Hong Kong market falls short in terms of having a representative index for these stocks. This new index serves to fill this gap and drive capital flows.”Citi analysts led by Pierre Lau wrote in a recent note that the index will attract investors to other Hong Kong tech stocks, facilitate the issuance of index-linked funds and derivatives as well as boost turnover at Hong Kong Exchanges & Clearing Ltd. That stock is up 40% this year, most in the Hang Seng Index.Supported by strong mainland inflows through stock connect links, Chinese technology shares have emerged as big winners in Hong Kong this year. Tencent has surged 38% while Meituan is up 82%.The Hang Seng Index, on the other hand, has underperformed. Nearly half of its members have fallen at least 20% this year.Morgan Stanley sees the new technology gauge providing a bigger sentiment boost near-term to the MSCI China Index than the Hang Seng, which has few components that will also be in the tech index. “The direct stock-level positives cannot translate into a meaningful index-level boost,” analysts led by Laura Wang wrote.(Updates Monday’s prices throughout)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) -- The euro advanced to the highest level since January 2019 after European Union leaders agreed on a stimulus package to reboot pandemic-hit economies.The common currency gained as much as 0.6% to $1.1516, as traders in the New York session pushed it above a key resistance level of $1.1495, its peak in early March. Looking ahead, $1.1595, the midpoint of its losses since February 2018, is seen as another pivotal mark. One strategist is forecasting the currency could rise to $1.30 for the first time in six years.After days of negotiations, EU leaders agreed on an initial plan of 750 billion euros ($860 billion). The emergency fund will give out 390 billion euros of grants and 360 billion euros of low-interest loans. For the first time, member states will underwrite joint bond issuance.The recovery fund will “give EU GDP a boost when their economy is likely recovering already -- so an added kick,” said Steve Englander, head of Group-of-10 currency research at Standard Chartered in New York. Englander forecasts the euro will rise to $1.16 by year end with risks to the topside.The euro peaked Tuesday near a level where traders projected that a barrier was in place. Dip buying remains the preferred strategy among real-money investors and hedge funds, Europe-based traders said.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.
Tencent's (TCEHY) aggressive steps, including the launch of its new studio, are expected to boost its competitive position against Google, NVIDIA, Amazon, NetEase and Microsoft in gaming space.
SINA's (NASDAQ: SINA) stock surged 10% on July 6 after the Chinese tech company received a go-private offer from New Wave MMXV, a British Virgin Islands-based company controlled by SINA's own CEO Charles Chao. New Wave already held a 55.5% voting stake in SINA after a share subscription agreement in late 2017. New Wave wants to acquire the remaining shares of SINA for $41 per share in a $2.7 billion deal.
(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.
Shares of Youdao (NYSE: DAO) gained 66.9% in June, according to data from S&P Global Market Intelligence. NetEase issued new common stock and also had its public debut on the SEHK on June 11, and its valuation climbed roughly 8.4% last month. Youdao posted much bigger gains than NetEase, but its stock movement trends tracked closely in line with those of its parent company.
(Bloomberg) -- Tencent Holdings Ltd.’s $40 billion surge this week and the recent ascent of Pinduoduo Inc. have reshuffled the ranking of China’s richest people.The country’s largest game developer has surpassed Alibaba Group Holding Ltd. as Asia’s most-valuable company, with its shares rising above HK$500 in intraday trading Wednesday for the first time. Pinduoduo, a Groupon-like shopping app also known as PDD, has more than doubled this year.The rallies have propelled the wealth of their founders, with an added twist: Tencent’s Pony Ma, worth $50 billion, has surpassed Jack Ma’s $48 billion fortune, becoming China’s richest person. And Colin Huang of PDD, whose net worth stands at $43 billion, has squeezed real estate mogul Hui Ka Yan of China Evergrande Group out of the top three earlier this year, according to the Bloomberg Billionaires Index.The coronavirus pandemic has accelerated the digitization of the workplace and changed consumers’ habits, boosting shares of many internet companies. Now tech tycoons are dominating the ranks of China’s richest people. They occupy four of the top five spots: Ding Lei of Tencent peer NetEase Inc. follows China Evergrande’s Hui.‘Perform Strongly’Tencent has come a long way since hitting a low in 2018, when China froze the approval process for new games. Since then, the stock has almost doubled, and last month the tech giant reported a 26% jump in first-quarter revenue.“Tencent’s online games segment will probably perform strongly through the Covid-19 pandemic, and most of its other businesses are relatively unscathed,” said Vey-Sern Ling, a Bloomberg Intelligence analyst.That has been a boon for Pony Ma, 48, who owns a 7% stake in the company and pocketed about $757 million from selling some 14.6 million of his Tencent shares this year, data complied by Bloomberg show.The native of China’s southern Guangdong province studied computer science at Shenzhen University and was a software developer at a supplier of telecom services and products before co-founding Tencent with four others in the late 1990s. At the time, the company focused on instant-messaging services.It has been a long comeback for Pony Ma. He overtook real estate tycoon Wang Jianlin as China’s second-richest person in 2013 and topped Baidu Inc.’s Robin Li as the wealthiest in early 2014. Later that year, Alibaba went public in the U.S., catapulting Jack Ma’s fortune.Bloomberg Intelligence’s Ling notes, however, that Tencent’s jump this year has lagged behind some internet peers, especially those in e-commerce, games and online entertainment. Just consider: Tencent shares have climbed 31% in 2020, while PDD’s American depositary receipts have more than doubled. Alibaba, meanwhile, has advanced just 6.9%.(Updates with Alibaba shares in last 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) -- China has penalized 10 of the country’s most popular livestreaming apps, suspending some of their operations in a renewed crackdown on fast-growing services backed by Tencent Holdings Ltd. and ByteDance Ltd.Regulators singled out ByteDance’s Xigua and three apps run by Tencent-backed firms -- Bilibili Inc., Huya Inc. and DouYu International Holdings Ltd. -- among those subject to punishments ranging from halting new user sign-ups to suspending content updates for “main channels,” the Cyberspace Administration of China said in a notice posted Tuesday. The watchdog said those services must rectify vulgar and other problematic content and that it’s blacklisted selected live-streaming hosts, without elaborating. NetEase Inc.’s CC Live and Baidu Inc.’s Quanmin were also among those named.Beijing is intensifying scrutiny over the country’s internet giants as they deepen forays into content and user contingents grow into the hundreds of millions. Livestreaming in particular has burgeoned in past years as platforms from Bilibili to DouYu become vibrant social media forums that penetrate well beyond cities and into the countryside, enabling an explosion of communications that’s proven increasingly difficult to monitor. That in turn has fostered a growing cohort of online influencers with followings in the millions.It’s unclear what the content suspensions encompass. Both Huya and DouYu, which divide content into channels like games or entertainment, posted in the main recommendation section of their apps that they have “suspended updates” since Tuesday, without elaborating. Representatives for Baidu, Bilibili, ByteDance, Huya, NetEase and DouYu didn’t immediately respond to requests for comment.Read more: The Billion-Dollar Race to Become China’s Amazon TwitchThe migration of viewership online during the pandemic has only accelerated the phenomenon. The regulators said Tuesday the punishments came after they conducted examinations of a total of 31 major streaming platforms.China’s top state broadcaster recently criticized Huya for hosting gaming ads in a channel offering free online courses for homebound students. In response, the company shut its learning page and offered refunds to minors who spent their parents’ money on games, the app said in a statement.In April, Chinese regulators suspended key channels in Baidu’s flagship mobile app, citing vulgar content. That two-week punishment could reduce revenue from its core search and feed business in the June quarter by close to 2%, according to an estimate by Jefferies analyst Thomas Chong.(Updates with regulators’ comment in the fifth 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) -- Apple Inc. will start removing thousands of mobile games lacking government approval from its App Store in China next month, closing a loophole that the likes of Rockstar Games have relied on for years.Developers and publishers in China have been told that their iOS games will need licenses to continue operating from July, according to people familiar with the matter. The decision ends the unofficial practice of allowing games to be published while awaiting authorization from the country’s slow-moving regulators.This has until now allowed games such as Grand Theft Auto, whose gory depictions of violence are unlikely to ever pass muster with Chinese censors, to be available within the country’s borders. China’s regulators require all games that are either paid or offer in-app purchases to submit for review and obtain a license before publication, and major Android app stores have enforced such rules since 2016. But unapproved games have flourished on Apple’s iPhone platform.It’s unclear why Apple -- a target of numerous regulatory clampdowns in the past -- hasn’t moved as swiftly as other app stores in China, which are owned and operated by local mobile giants like Alibaba Group Holding Ltd. and Xiaomi Corp.The latest approvals process took effect in 2019 amid confusion among industry players about the speed with which Beijing, known for months-long content reviews that may or may not lead to a monetization license, would process requests. For its part, Apple has begun ramping up oversight of its Chinese app store, removing two podcast apps earlier this month at China’s request.Back in February, Apple reminded iOS developers in the country to obtain licenses for their titles by June 30. But it was only after prolonged uncertainty about enforcement that the iPhone maker explicitly told publishers that any unlicensed games after the deadline will be banned and removed from the local App Store, according to the people, who asked not to be identified because the matter is not public.There’s no telling how long it will take to remove all unlicensed games once the change comes into effect. Chinese gaming blog Gamelook earlier reported Apple’s upcoming enforcement.An Apple representative declined to comment.China accounted for about a fifth of the $61 billion in digital goods and services sold via Apple’s App Store in 2019, making it the largest market after the U.S., the Analysis Group estimates. Apple takes a 30% cut from the majority of such transactions.There are roughly 60,000 games on China’s iOS App Store that are either paid or contain in-app purchases, and at least a third of them don’t have a license, according to an estimate by AppInChina, which helps companies localize and publish their apps in the country.“These companies will suddenly lose all revenue from what is typically their second-largest market after the U.S.,” said AppInChina Chief Executive Officer Rich Bishop. His firm received three times its usual volume of enquiries about game licenses over the past week, he added.Apple’s new effort highlights the Chinese government’s tightening grip on gaming. Citing concerns about the proliferation of addiction among minors and the dissemination of offensive content, regulators now adopt a much stricter and slower review process than before they temporarily halted all approvals in 2018.While big local players like Tencent Holdings Ltd. and NetEase Inc. have adapted their existing cash cows and can respond to censors’ demands in the development of new games, smaller developers and publishers lack the same resources. Many of them have started attaching a single license to multiple games with similar gameplay, logos or heroes, though the government is aware of the practice and cracking down on it as well.Imported games are under particularly tight scrutiny, and the App Store loophole served as a last resort for getting some of them distributed in China. Plague Inc., which mimics the spread of an epidemic, had topped the download charts on China’s App Store for weeks during the country’s Covid-19 lockdown. But the unlicensed title was pulled in March after Chinese regulators deemed it to have “illegal” content, according to its developers.Neither of the remaining options for small game developers appears particularly enticing. They could switch their revenue model to in-app advertising, which is not covered by the same approval process. Or they can team up with big publishers like Tencent to obtain licenses, though that would involve giving up some measure of autonomy, while Tencent itself is more interested in well-known franchises.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.
(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.
(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) -- 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.
(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.