Bottom line: The MSCI’s inclusion of US-listed Chinese stocks like Baidu and Alibaba in some of its emerging market indexes will support the shares by attracting more long-term investors.
Alibaba, Baidu get support from MSCI inclusion
Investors who previously looked enviously at Chinese Internet stocks but were too afraid to buy due to their volatility have new reason for confidence, with word that one of the world’s top index compilers will include the country’s top names in some of its indexes. The move by MSCI has been long overdue, and comes just months after the global index compiler disappointed China boosters by declining to allow Shanghai- and Shenzhen-listed A-shares into its emerging markets indexes.
This particular move will also come as a welcome development to people who argue that China’s best companies are better served by listing their shares in overseas markets like the US and Hong Kong rather than at home. Many Chinese Internet companies that previously listed in New York have been abandoning the market recently by launching privatization bids, with an aim of eventually re-listing in China to try for better valuations. Read Full Post…
Bottom line: Alibaba and Baidu’s inclusion in MSCI indexes and SouFun’s new dual listing in China highlight reasons why overseas markets are still an attractive place for leading private Chinese companies to list.
SouFun eyes dual listings in China, NY
Two new developments last week highlighted why overseas listings are still beneficial and even desirable for some Chinese companies, even as a flood of New York-listed firms move ahead with plans to leave New York and re-list in China.
The first development saw MSCI, one of the world’s top index compilers, say it would include Chinese companies in its products for the first time by choosing several US-listed firms, including Internet titans Alibaba(NYSE: BABA) and Baidu (Nasdaq: BIDU). The second saw investors applaud a plan by leading online real estate services firm SouFun (NYSE: SFUN) to take control of a Shanghai-listed company, a move designed to gain access to Chinese capital markets while maintaining its New York listing. Read Full Post…
Bottom line: Vipshop’s third-quarter revenue shortfall is the latest signal that China’s e-commmerce sales are set to slow after a period of rapid growth, and could pressure the company’s stock over the next few months.
Warm autumn chills Vipshop sales
Discount e-commerce superstar Vipshop (NYSE: VIPS) has suddenly lost some of its luster, after announcing a revenue shortfall that sparked a 27 percent plunge in its stock. The unusual revenue miss looks even more unusual in China’s broader booming e-commerce sector, where leaders Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) are still basking in the glow of a record-breaking Singles Day online shopping blitz last week. (previous post)
The bigger question that many will be asking this week is whether there’s any broader significance to Vipshop’s new announcement that it missed its previous third-quarter revenue forecast by 6 percent. (company announcement; Chinese article) Some others have warned of a similar slowdown, and I previously said the big Singles Day sales totals were at least partly manipulated by online merchants trying to meet tough targets set by online mall operators. (previous post) Read Full Post…
Bottom line: Tencent’s recent cash-raising frenzy probably signals a major equity investment coming in the next few months, with a merged Meituan-Dianping or Activision as the most likely targets.
Tencent raises more cash via syndicated loan
Tencent(HKEx: 700) may be the lowest-key of China’s big 3 Internet companies, but the company has been far louder on the money- raising scene by borrowing billions of dollars in cash lately. The social networking (SNS) giant has raised billions through a series of bond issues over the last year, and now looks set to raise another $1.5 billion through a syndicated loan that it’s reportedly negotiating with several major western lenders.
All this raises the question of what exactly Tencent is targeting with all the new cash. The company has been the least acquisitive of China’s big 3 Internet companies, which include itself, Alibaba(NYSE: BABA) and Baidu(Nasdaq: BIDU), amid a major consolidation in China’s Internet over the last 2 years. Read Full Post…
Bottom line: Alibaba’s 60 percent sales growth on Singles Day is truly impressive, but was almost certainly boosted by merchants that delayed logging transactions on its network until the 24-hour period to help meet their sales targets.
Alibaba shatters Singles Day sales record
The numbers are in, and e-commerce juggernaut Alibaba (NYSE: BABA) has posted a record performance for this year’s Singles Day online shopping extravaganza that has surprised even me for the margin by which it surpassed last year’s record. I’ll end the suspense right away and reveal that Alibaba posted 91.2 billion yuan ($14.3 billion) worth of sales over its platforms during the 24-hour online shopping binge, up more than 50 percent from last year’s $9.3 billion. (company announcement)
To put that in perspective, Alibaba posted $112 billion in gross merchandise value (GMV) for goods sold over all its platforms in this year’s entire second quarter. That means the Singles Day total is equal to 13 percent of its entire total for the 3 months through September, quite impressive for a single day. Read Full Post…
Bottom line: An unexpected mid-sized transaction between Baidu and Perfect World could indicate the former is preparing to buy the latter, with an aim to building up a major new player in the online gaming and literature spaces.
Baidu eyeing Perfect World?
Leading search engine Baidu(Nasdaq: BIDU) has reportedly just sold its online literature unit to the recently privatized Perfect World, in a rare reversal for China’s big Internet companies that have been far more active as buyers over the last 3 years. The deal is relatively small, with a reported sale price of 1.2 billion yuan, or about $190 million.
Media are focusing on the fact that Baidu paid far less when it bought the literature unit for a reported 190 million yuan from the same Perfect World just 2 years ago, meaning Baidu earned quite a nice profit on the investment. But more intriguing is the possibility that this move could presage an acquisition of Perfect World by Baidu, which looks quite logical for a number of reasons I’ll describe shortly. Read Full Post…
Bottom line: A deal for Alibaba to buy a minority stake in Hong Kong’s SCMP looks logical despite dubious sourcing in reports on such talks, and could help to revive the group’s flagging fortunes by bringing in new partnerships and other resources.
Alibaba eyes traditional media with SCMP investment rumors
Just days after word emerged of a major shake-up in the newsroom of the South China Morning Post (HKEx: 583), new reports are saying that Chinese e-commerce giant Alibaba(NYSE: BABA) may be interested in a major investment or even outright purchase of Hong Kong’s leading English-language newspaper. Sourcing on the reports is quite flimsy, which I’ll describe shortly and makes me slightly dubious that such talks are happening.
But such a move also has a certain logic, since the SCMP’s current owner is reportedly looking to sell the newspaper that has a relatively modest current market value of about HK$2.8 billion ($360 million). What’s more, Alibaba has also been moving aggressively into the media and entertainment spaces, including its recent purchase of leading online video site Youku Tudou(NYSE: YOKU) and formation of a joint venture with a leading mainland financial newspaper. Read Full Post…
Bottom line: JD’s decision to shutter its Paipai C2C marketplace looks like a smart move, as China looks set to crack down on online trafficking in fake goods that is often rampant and hard to police on such sites.
JD to shutter Paipai by next April
E-commerce JD.com(Nasdaq: JD) has just announced it is formally shuttering it Paipai C2C site, citing difficulties policing the thousands of small merchants and individuals who sell products on the site. Timing of the move is slightly strange, since JD announced the downbeat decision just a day before the November 11 Singles Day, which has become the world’s biggest day for online shoppers.
On the surface at least, the move looks like a major victory for archrival Alibaba(NYSE: BABA), whose Taobao online marketplace competes directly with Paipai and controls the vast majority of China’s C2C e-commerce market. But the move also represents a major tactical decision for JD, since C2C markets are notoriously difficult to police for fakes, substandard products and fraud due to the huge number of merchants they host. Read Full Post…
Bottom line: CICC and Jiuxian are benefiting from a growing number of domestic listing options for private Chinese companies, but both will still need to show they can be profitable industry leaders for investors to take them seriously.
Jiuxian finally debuts on China OTC
A couple of new IPOs are highlighting the growing allure of China’s increasingly diverse stock markets for domestic companies that used to flock to New York. Leading the headlines is a very respectable performance in the long-awaited Hong Kong trading debut for CICC (HKEx: 3908), China’s oldest investment bank. The strong debut came even after CICC had to scale back the offering due to weak demand, and market watchers are attributing the performance to separate news that China will resume domestic IPOs by year-end after a pause of several months.
In the other headline, online wine seller Jiuxian has become the latest Chinese Internet firm to list on the country’s 2-year-old over the counter (OTC) market. The loss-making Jiuxian had initially aimed to list in New York, but abandoned that plan for a simpler offering at home. It joined other money-losing startups making similar listings over the last week, including online classified ad site Baixing and Alibaba-backed (NYSE: BABA) soccer club Evergrande Taobao. (previous post) Read Full Post…
Bottom line: Alibaba’s Youku Tudou purchase, its investment in a US online grocery store and its spat with JD mark a return to the headlines for the company following a quiet period, as it regains confidence following a piracy scandal early this year.
Alibaba invests in US online grocer
E-commerce leader Alibaba (NYSE: BABA) may have briefly gone into headline hibernation over the summer when its stock was in free-fall, but it’s quickly returning to a more familiar hyperactive mode as its Singles Day shopping extravaganza approaches this week. The company is in at least 2 M&A headlines as we head into the new week, announcing its signing of a formal deal to buy leading online video site Youku Tudou (NYSE: YOKU) and reportedly nearing a deal to make a relatively big investment in a US online grocery site called Boxed.
Meantime, a recent spat between Alibaba and archrival JD.com(Nasdaq: JD) continues to make headlines just 2 days before Singles Day, which falls on November 11 and has rapidly grown to become the world’s busiest online shopping day. That spat burst into headlines last week and revolves around anti-competitive accusations made by JD, which has now also sued Alibaba for allegedly making inflated claims about its delivery service. Read Full Post…
Bottom line: China’s commerce regulator is putting growing pressure on Alibaba to play by its rules governing piracy and fair competition, but is likely to keep dialogue private to avoid public spats like one early this year.
SAIC accepts JD’s Alibaba complaint
E-commerce juggernaut Alibaba (NYSE: BABA) is coming uncomfortably under the microscope just days before its important Singles Day shopping extravaganza, with 2 new developments reflecting growing scrutiny from the nation’s top commerce regulator. The first has the powerful State Administration for Industry and Commerce (SAIC) formally accepting a complaint from rival JD.com (Nasdaq: JD), which accuses Alibaba of strong-arm tactics aimed at stifling competition during Singles Day promotions set for November 11.
The second headline looks a bit more benign, and simply says that SAIC Minister Zhang Mao visited Alibaba’s headquarters in the city of Hangzhou in coastal Zhejiang province this week. Headlines from that meeting look designed to show a facade of harmony, with Zhang praising Alibaba for its innovation in e-commerce. But I do suspect that Zhang is strongly pushing Alibaba behind the scenes to clean up its sites of traffic in pirated and substandard products, and also to avoid abusing its market dominance that led to the JD.com complaint. Read Full Post…
