31.03 0.00 (0.00%)
After hours: 4:38PM EDT
|Bid||31.00 x 900|
|Ask||31.01 x 900|
|Day's Range||31.00 - 31.67|
|52 Week Range||19.21 - 38.31|
|Beta (3Y Monthly)||1.41|
|PE Ratio (TTM)||211.09|
|Earnings Date||Aug 14, 2019 - Aug 19, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||33.26|
China released its second-quarter GDP report today. The country’s GDP expanded 6.2% in the second quarter, marking its slowest growth since 1992.
Amazon (NASDAQ:AMZN) closed down last Thursday slipping 0.83% on the day. But for a short time that morning, Amazon stock continued its July rally and passed the $2035 mark.Source: Shutterstock That milestone put it in the rarified company of Microsoft (NASDAQ:MSFT) as a trillion dollar company -- a position Amazon has not been in since last September. * 7 Dependable Dividend Stocks to Buy Here's why AMZN stock has been on the rise this month, and why there could be clouds on the horizon.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Anticipation Over Prime Day is Boosting Amazon StockPrime Day is on July 15 and 16 this year. So that's two days, but like JD.com (NASDAQ:JD) and its yearly 6.18 anniversary sale (which actually runs for several weeks) AMZN isn't known for being a stickler on nomenclature.However, one thing is certain and investors know it: Prime Day is huge for Amazon. It's the company's largest shopping event, surpassing Cyber Monday and Black Friday.The company suffered a black eye last year when its website repeatedly glitched for several hours, but despite technical issues, the sale was a huge success. AMZN reported selling more than 100 million products worldwide during the Prime Day event. Sales were up 89% over the previous year in the first 12 hours -- despite issues with its website during that time. Amazon doesn't release dollar figures, but it was estimated that last year's Prime Day brought in $4.19 billion in worldwide sales. That's a huge number, and up 60% over the $2.41 billion from the previous year's event. To put it all in perspective, the first Prime Day (in 2015) brought in an estimated $900 million in sales.With those kind of numbers, you can see why Amazon stock had been on a run in July, gaining nearly 5% since the start of the month, before slipping on Thursday. Also Helping AMZN? The Trade War's Limited ImpactAMZN stock -- like many other tech stocks -- had also been impacted by concerns over the trade war between the U.S. and China. The threat of increased tariffs on Chinese good sold in the U.S., and the potential for retaliatory measures was bad news for Amazon. A trade war could impact the economy globally, and cut consumer spending. In addition, tariffs make products more expensive which means consumers may buy less. Both scenarios are tough on retailers, and despite its size AMZN is not immune.Fear that the situation was escalating hit AMZN stock hard in May, but as rhetoric cooled and consumers kept buying, Amazon stock recovered. Its latest rally took it to a new high for 2019 and Amazon's market cap briefly hit the $1 trillion mark. Storm Clouds on the Horizon for Amazon StockThis week is critical for Amazon, with Prime Day falling on the 15th and 16th. However, there's another big event involving AMZN that may be a little less pleasant for the company and its investors. On July 16, Amazon and other FAANG tech companies will be appearing before the House Antitrust Subcommittee. In AMZN's case, the company's grip on e-commerce will be under particular scrutiny.Should investors worry that the government's interest in the company could result in measures that torpedo Amazon stock? Analysts at Wedbush believe the investigations won't result in actual intervention any time soon, and the long-term impact on Amazon and AMZN stock may be less than feared."These hearings and potential DOJ probes can represent an overhang and risk to the FAANG group, but we would encourage investors to focus on the fundamentals in the near-term as any probe would take years to complete as we witnessed firsthand with Microsoft, which proved to be more noise than a structural jolt to its business model." In other words, stay calm and enjoy what is expected to be another record-setting Prime Day.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post Amazon Stock Briefly Takes the Company to the Trillion Dollar Club appeared first on InvestorPlace.
The battle for market share in China's ecommerce arena is over. Alibaba (NYSE:BABA) won. There's no reason for JD.Com (NASDAQ:JD) shareholders decide to dump their JD stock, though. Alibaba isn't as well-positioned to dominate the next chapter of eastern Asia's maturing online-shopping industry; JD.com is the name to own on that front.Source: Shutterstock The next chapter is distinctly different from the previous one. Alibaba was largely in the right place at the right time, stealing a few pages from the Amazon (NASDAQ:AMZN) playbook at a time when China's outlying areas were first accessing broadband, and smartphones were becoming the norm. JD arrived a little too late to that party.With the country's ecommerce market now relatively well saturated, the next chapter is one that will sell omnichannel and brick-and-mortar retailing support as a service in and of itself. That's something JD has been doing for a while.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Logistics and JD StockIt was laying the groundwork for the marketable service long before logistics became a revenue-bearing product.As far back as 2014, JD had already established more than 80 warehouses, more than 1,600 delivery stations and more than 200 pickup sites in almost 500 Chinese cities. Same-day delivery was readily possible in most locales, and where it wasn't easy, the nascent ecommerce outfit partnered with local convenience stores.It was a network that would serve as the framework for something much bigger, however.In early 2017, with deliveries and online-selling mostly mastered, JD partnered with Zebra to address the inevitable future of retail. The creation of the IoT + E-commerce Logistics Lab set the stage for higher-level things like data gathering and machine vision that would further obscure any seams between the steps taken between a consumer's purchase and final delivery.The logistics-as-a-service unit had become so well gelled, in fact, that in early 2017 JD.com spun it off as a stand-alone entity, though it didn't stop development there. By last year, JD opened up its logistics network to third-party consumers and businesses, handling goods that weren't directly sold to buyers out of JD's inventory.Although it's a separate entity, there's no disguising that JD Logistics largely exists to support JD.Com. The ecommerce site still owns more than 80% of JD Logistics, which just raised more than $200 million to invest in other logistics companies and related technologies.JD is offering solutions to China's consumer-oriented companies -- and small players in particular -- that Alibaba isn't at a time when e-commerce spending (and offline spending) growth is slowing down. The Alibaba Threat and JD StockThat's not to suggest Alibaba isn't developing marketable solutions of its own as the market's e-commerce industry marches toward its peak.Case in point: In late 2017, Alibaba began work that would allow China's six million small stores to plug into the power of cloud computing.The platform, called Retail Integrated, was designed to help mom-and-pop shops streamline inventory purchasing and improve sales. The service was free, as long as users let Alibaba use those stores as shipping dropoff and delivery points, and store owners were willing to share valuable customer data.By 2018, the e-commerce behemoth was using much of that technology to make its own grocery store chain, Hema, a state-of-the-art experience. The use of QR codes on a product's label not only serves as a means of providing more information, but it's also how consumers can select and pay for goods while they shop using nothing but their smartphones.The technology even allows Hema stores to map out the typical path shoppers take through the aisles, identifying less-visited and more visited areas.Alibaba's retail tech has its fans and users to be sure, but adoption has been modest. The solution is for a problem most of China's small shops aren't convinced they have. What they really need is logistics solutions and foot traffic coming into their stores to begin with.That's what JD.Com and JD Logistics are offering. Looking Ahead for JD StockInvestors should absolutely keep things in perspective.JD stock may have an edge right now with a much better-developed and more thoughtful logistics solutions, but Alibaba is still Alibaba. It can buy what it's not yet developed. To that end, in March it invested nearly $700 million in China's delivery and logistics outfit STO Express. It's not done anything to alter STO's operation, but there's a reason it wants a seat at the table.JD isn't merely coasting on its past developments though. JD Logistics continues to work in a way that maintains its lead on the logistics front. That, at least indirectly, supports JD.com's ecommerce ambitions.It's also a huge, even if overlooked, undertow that could let JD stock outperform most other names on China's e-commerce landscape for the long haul.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post Alibaba Looms Large, but Logistics Keeps JD Stock Growing appeared first on InvestorPlace.
Since reaching nearly $200 in early May, Alibaba (NYSE:BABA) stock has come under pressure. But over the past few weeks, Alibaba stock has seen notable improvement.Source: Shutterstock The reason: There was a relaxation of tensions in the trade war between the U.S. and China. President Trump agreed to hold off on any new tariffs and he loosened restrictions on selling technology to Chinese powerhouse, Huawei.So there was good reason for a rally. In fact, for the year so far, the BABA stock price has risen about 24%. This is actually in-line with the kinds of returns for the past few years.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut of course, the main question now is: What's in store for Alibaba stock going forward? Well, besides the improvement with the trade situation, there are other major catalysts that should help with BABA stock. So let's take a look at three: China Ecommerce PowerhouseAs seen with Amazon (NASDAQ:AMZN) in the U.S., the dominance of the ecommerce market is a mega advantage. It allows for the collection of massive amounts of data and provides a platform for launching new services. * 7 of The Best Schwab ETFs for Low Fees And yes, when it comes to BABA, the company is essentially the Amazon of China … but with a much more profitable model. The company operates a high-margin digital marketplace that connects buyers and sellers.Keep in mind that the scale is enormous, dwarfing the U.S. market. BABA has 721 million mobile monthly active users (MAUs), up 104 million on a year-over-year basis.To get a sense of how large the opportunity, here's what BABA Executive Vice Chairman, Joseph Tsai, said during the fourth-quarter earnings call: "The middle class in China has reached critical mass of over 300 million, almost as large as the entire U.S. population. The middle class will double in the next 10 years, especially from the lesser developed Chinese cities. While total Chinese domestic consumption is $5.5 trillion today, consumption from these third-, fourth-, and fifth-tier cities, with a combined population of 500 million people, will triple from $2.3 trillion to nearly $7 trillion in the next 10 years."The company has also been aggressive in building on-demand services, such as for food delivery. Part of the strategy has been to partner with companies like Starbucks (NASDAQ:SBUX). Such efforts will certainly be a big help in providing more convenience and stronger connections with customers. Cloud And AIAgain, BABA has borrowed from the Amazon playbook by making an aggressive move into the cloud industry. This may actually turn out to be the biggest growth driver. In fact, BABA's cloud business is already the largest not only in China, but the whole Asia Pacific region.During the latest quarter, revenues in the segment spiked by 76% to $1.15 billion. To keep up the growth, BABA has been rapidly innovating the cloud platform by adding new services for blockchain, cybersecurity, database systems and AI.Note that BABA has also been leveraging these technologies across its own properties. For example, Tmall Genie is an AI-powered smart speaker. Then there is the Amap app, which is China's largest mobile provider of mapping, navigation and traffic information. Financials And ValuationThe valuation on BABA stock is fairly reasonable. Consider that the forward price-to-earnings multiple is 19X. By comparison, JD.com (NASDAQ:JD) trades at 29X - and is growing at a much slower pace. For example, BABA reported revenues that jumped a sizzling 51% to $13.9 billion during the latest quarter.And with the resources, BABA has been making smart investments. Perhaps the most significant is Alipay, which has become one of the largest payment networks in China along with Tencent's (OTCMKTS:TCEHY) WeChat.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post 3 Reasons Alibaba Stock Will Continue to Rise appeared first on InvestorPlace.
(Bloomberg) -- Tiger Global Management has examined at least a dozen deals with Indian startups in recent months, according to multiple people with knowledge of the talks, illustrating global investors’ fierce interest in the country’s technology ecosystem.The ultra-secretive New York-based hedge fund has closed investments in at least half of these startups -- nearly all of them in fintech or enterprise software segments. Hedge funds, venture capital firms, and the likes of South Africa-headquartered internet group Naspers Ltd. are also chasing India’s rapidly growing consumer internet and enterprise software firms.The rising interest in India occurs as investment in China’s recently booming startup sector faces a steep drop-off. It’s a radical progression from just a few years ago when global investors worried about the prospects for India. Fewer smartphones and expensive wireless-data plans restricted internet access to a tiny user pool in a country of 1.3 billion people, pushing investors to chase the handful of entrepreneurs building consumer internet startups. Now cheap Chinese smartphones and inexpensive data rates offered by the aggressive telecom giant Reliance Jio Infocomm Ltd. and its rivals are luring millions of users online every month.There’s buoyancy also because India’s recent decisive election assured political stability, said venture capitalist Vani Kola, managing director at Kalaari Capital Advisors Pvt, prompting international funds to get back in the investment game. “Investors like Tiger Global are enthused that the market is stable and has reached a certain maturity,” she said. “There’s confidence in the depth of the market.”This year is already being dubbed Tiger Global India redux by some. The influential investor is renowned for its early bets on high-profile Indian consumer internet startups like Ola, and its triumphant exit last year from most-valuable Indian startup Flipkart, which netted a $3 billion return. In the first half of 2019, Tiger has already funded 13 Indian companies, according to researcher Tracxn Technologies Pvt, compared with 8 investments in 2018 and 6 the year before.The spigot remains open, according to the people, who didn’t want to be named as the deal signings are ongoing. On Thursday, supply chain software developer Moglix became the latest investment when the startup announced it had closed a $60 million financing round led by Tiger.Tiger’s new focus on enterprise software services coincides with management changes. Lee Fixel, the 39-year-old co-head of private equity for the technology-focused fund, recently departed the firm and Scott Shleifer, a partner, took over the portfolio. Schleifer, 41, best known for turning a $200 million investment in Chinese e-commerce platform JD.com Inc. into a $5 billion return, went on a whirlwind trip to India recently to meet entrepreneurs.The newest bets by the deep-pocketed hedge fund are mostly in the sub-$50 million range. They include logistics-management startup Locus, agritech provider Ninjacart, expense-management software provider Fyle, and Zenoti. All are spearheaded by Schleifer, the people said.India’s historical strength in IT services is also spawning thousands of software-as-a-service and business-to-business companies, a natural evolution given the expertise of the labor pool.“Investors are excited to see India’s transition from an IT services powerhouse to a rising B2B solutions hub,” said Sudheer Koneru, founder and chief executive officer of Zenoti, where Schleifer led a round of funding last month. Services can be virtually served on the cloud to customers anywhere in the world, making it viable to build SaaS startups in low-cost India.“Not just Tiger -- other global investors too are waking up to the exciting surge of B2B startups coming out of India,” said Koneru.Koneru’s Zenoti provides business and customer management and software services to beauty and wellness businesses, including spas, salons and gyms. Its 340 workers in the southern city of Hyderabad engineer the product, generate leads, and offer tech support to customers. After initially serving Indian businesses, nearly two thirds of Zenoti’s customers are in the U.S., and it’s doubling revenues year-on-year.Investments in Indian startups from other global names have also gathered pace in recent months. SoftBank Group Corp. and its Vision Fund, for instance, have invested in logistics provider Delhivery, and in Ola earlier this year, converting both into unicorns. India’s leading fintech startups are also in fund-raising mode.“Investors are finally seeing numbers, and the market is looking very very viable,” said Neha Singh, co-founder of researcher Tracxn.(Updates with latest deal announced in the sixth paragraph.)To contact the reporter on this story: Saritha Rai in Bangalore at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, ;Tom Giles at email@example.com, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Before being detained by police in Shanghai, Lo Ching was lauded as the new-age Hua Mulan, the legendary female Chinese warrior. Now the downfall of Lo, chairman of a Hong Kong-listed conglomerate, has become a parable of the dangers of investing in China. Noah Holdings Ltd., one of China’s largest wealth managers catering to high-net-worth individuals, is among the first to find out. The U.S.-listed asset manager has filed a lawsuit against Camsing International Holding Ltd. related to a 3.4 billion yuan ($490 million) credit product in danger of default, according to a filing this week. The word default, itself, isn’t so scary. After all, evaluating the risk that an obligation won’t be paid is what credit investors do every day. Nor is Camsing’s credit product all that unusual: The underlying assets are account receivables the company expects from China’s top-tier retailers, JD.com Inc. and Suning.com Co.Formal financing channels – such as bank loans, corporate bonds or exchange-traded asset-backed securities – aren’t readily available to smaller private enterprises in China. So while the likes of Alibaba Group Holding Ltd. can regularly issue account receivables-backed securities, small businesses often use their working capital as collateral for loans from asset managers. In the case of Camsing, Lo pledged her 62% stake in the company to Noah. The worrying part about all this is whether any money can be clawed back. JD.com and Suning said they don’t owe Noah the 3.4 billion yuan: “Camsing falsified JD.com’s business contracts,” a JD.com spokeswoman told Bloomberg News. Camsing held 5.7 billion yuan in account receivables, 74.4% from Suning and 23.2% from JD.com at the end of 2018, Caixin reported, citing Camsing financial documents the financial news site said it had seen.As for those shares Lo pledged, they’re hardly worth anything now. Camsing’s stock crashed 80.4% on Monday after news of Lo’s detainment broke. That 62% stake is worth just HK$340 million ($43.5 million) now.Noah can file as many lawsuits as it wants; the truth is its path to recovery doesn’t look good. Data on these types of shadow-credit products are slim, but reviewing defaults of exchange-traded corporate bonds, China Inc. has a lousy track record. Among the 128 issuers that have defaulted on their bond obligations since 2014, only 28 have paid back investors in full. Of the total 216 billion yuan in missed bond payments, only 31 billion yuan, or 14.5%, has been repaid, according to HSBC Holdings Plc. Private enterprises are the worst offenders. Of the 17 state-owned enterprises that have defaulted, 41% have paid investors back, according to HSBC. By comparison, just 19% of the 111 private business that defaulted repaid creditors.As I argued last week, when it comes to private businesses, no one will come to rescue lenders and minority shareholders if things go sour. While cash-strapped local governments rarely pump their fiscal dollars into failing state enterprises these days, none of them wants to see a local champion fail. Somehow municipalities will wring money from bailout funds, strategic investors or even local banks to save struggling businesses. I’d love to laud the animal spirits of China’s private enterprises, but recent waves of corporate-governance scandals – from missing cash to potentially falsified business documents – are scaring investors. If you’re into stocks, by all means go with your heart. If you’re a credit investor, use your head instead.To contact the author of this story: Shuli Ren at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Ride-hailing giant Go-Jek has secured an investment from Siam Commercial Bank Pcl, the Thai lender that counts King Maha Vajiralongkorn as its biggest shareholder, according to people familiar with the matter.It’s unclear how much Thailand’s biggest bank is investing in Go-Jek, the people said, who asked not to be identified because the matter is private. Their partnership will help Indonesia’s most valuable technology startup bolster its financial services, while Siam Commercial is counting on online growth to help increase revenue, they added.Southeast Asia’s banks are increasingly teaming up with technology firms that are getting onto their turf, offering financial services from digital payments to consumer loans. Thailand’s Kasikornbank Pcl has invested $50 million in Go-Jek’s rival, Grab, and the pair intend to establish a co-branded mobile wallet.Established over a century ago by royal charter, Siam Commercial Bank is Thailand’s oldest homegrown lender. It’s the latest to join Go-Jek’s ongoing series-F round, a term denoting late-stage financing.The startup has already raised over $1 billion as of the round’s first close, Bloomberg reported in February. Alphabet Inc.’s Google, JD.com Inc. and Tencent Holdings Ltd. invested alongside Provident Capital. This week, Go-Jek announced additional investment from Mitsubishi Motors Corp., Mitsubishi Corp. and Mitsubishi UFJ Lease & Finance Co. as part of the series F financing.Go-Jek, which debuted its app for hailing motorbike taxis in Jakarta in 2015, is expanding beyond Indonesia to cater to consumers across Southeast Asia, aiming to popularize an all-purpose consumer app similar to Tencent’s WeChat in China. It is valued at $10 billion according to CB Insights, and hosts more than 20 on-demand services on its platform from food delivery to cab-hailing.Representatives of the bank and Go-Jek declined to comment.To contact the reporters on this story: Yoolim Lee in Singapore at firstname.lastname@example.org;Anuchit Nguyen in Bangkok at email@example.comTo contact the editors responsible for this story: Divya Balji at firstname.lastname@example.org, ;Tom Giles at email@example.com, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Over the past few months, the stock price of Alibaba (NYSE:BABA), one of the most important Chinese companies to be listed on U.S. exchanges, has been extremely choppy as the rhetoric on U.S.-China trade issues has become the elephant in the room.Source: Shutterstock It's probably the understatement of the past 12 months to say that the trade war between the U.S. and China have brought significant uncertainty to the global stock markets. As a result, most Chinese stocks are currently much cheaper than they were a year ago.Now that the meeting between President Donald Trump and the Chinese President Xi Jinping at the G20 summit is over, investors will turn their attention to the Federal Reserve's interest rate decision as well as the upcoming earnings releases by many tech heavyweights. Therefore, the recent volatility we have experienced, especially in the tech sector, is likely to stay with us for a while.InvestorPlace - Stock Market News, Stock Advice & Trading TipsToday let us discuss BABA stock in light of the developments in China as well as South and South East Asia. The Chinese Economy Is Growing and EvolvingOver the past two decades, Alibaba has become a highly regarded global company, and BABA stock offers U.S. investors the chance to invest in the growing Chinese consumer and e-commerce markets.Although the Chinese economy may slow down in 2019 or even 2020, its GDP is still expanding at an average annual rate of 6% minimum. This growth is indeed faster than almost any other major economy in the world. With a population of almost 1.4 billion people, China's economic growth is still in its early stages and the Chinese middle class is likely to expand for a long time. * 10 Best Stocks for 2019: A Volatile First Half About 20% of the country's retail purchases are made online. In 2018, the online retail sales of goods and services was over $1.3 billion, up by 23.9% year-on-year (YoY). Readers who are interested in various statistics on China may want to refer to the website of the National Bureau of Statistics of China.In other words, China's growing middle class will continue to drive increases in the country's consumer spending. And when average Chinese citizens have more money in their pockets, more of it can be spent on online shopping sites like Alibaba, which itself is a good proxy for levels of retail spending in China.Furthermore, many analysts believe that BABA stock's bottom line is not going to be too adversely affected by current trade wars, as its business model is tied to China directly, decreasing the long-term risks of bi-party trade wars.This fact may indeed be important for long-term Alibaba shareholders, as in general the trade war has had a negative impact on investor sentiment as well as on the prices of many tech stocks. After all, the U.S. is still China's biggest trading partner, as it buys almost one-fifth of its exports.As weeks go by, not many analysts believe that the U.S. and China are likely to conclude a comprehensive trade agreement soon. The negotiations may well drag out right up to the U.S. presidential elections.Yet, BABA stock may prove quite resilient to further news on the trade disputes, especially as one headline is usually reversed in a few days by usually an opposite headline. Alibaba's management has also downplayed the potential adverse effects of the trade war on BABA stock. Soon, markets may stop caring much about the news on the trade rhetoric. How Does Alibaba Stock Make Money?Alibaba is expected to release its next earnings statement on Aug. 22.When BABA stock released its most recent quarterly results on May 15, both sales and earnings exceeded estimates. Total revenue came at $56.1 billion, an increase of 51% YoY. On the bottom line, BABA stock grew adjusted net income by 12%. In fiscal 2020, management expects Alibaba's revenue to top $72 billion, a 33% YoY growth.In the most recent quarterly statement, analysts have paid attention to four main areas: * Core commerce (BABA's largest segment, whose revenue grew 54% YoY); * Cloud computing (revenue soared soared 76% YoY); * Digital media and entertainment (revenue increased 8% YOY); and * Innovation initiatives (revenue jumped 22% YOY).Despite the company's dominance in the Chinese e-commerce space, Alibaba is also rapidly expanding into many other lucrative industries aside from consumer products and retail. These segments include cloud computing infrastructure (i.e., Alibaba Cloud), digital payments (i.e., Ant Financial Services Group), online entertainment (i.e., Youku Tudou and Alibaba Pictures), and food delivery (i.e., Alibaba Local Services Company which is a merger between Ele.me and Koubei).Alibaba also owns over 31% of Weibo (NASDAQ:WB), the Chinese microblogging company. Chinese internet celebrity (better known as "wanghong") accounts at Weibo, and the website's rich multimedia functionalities help make WB a much-loved and somewhat indispensable social media company within China. Furthermore, WB's recent investments in live video streaming and fintech have already started contributing to the bottom line.Although many analysts have expressed growth concerns regarding China in the coming quarters, the country's economic fundamentals have vastly improved over the past decade. The internet population is still booming and money continues to pour into Chinese companies operating in this space -- factors that help support the long-term durability of BABA stock. BABA Stock Has Robust FundamentalsAlibaba has been branching out into other business ventures, and this expansion has been made possibly partly by its steady free cash flow (FCF), which measures a company's ability to produce cash. Investors care a lot about FCF, as it can be used in a discretionary manner. For example, BABA has used its FCF to invest in growth opportunities and strengthen its balance sheet further.Therefore on Aug. 22, Wall Street is likely to analyze the company's cash position closely. Many analysts expect Alibaba's revenue to continue growing by double-digit-percentage rates.In general, Alibaba's management does not provide any earnings guidance for future quarters. But there is general consensus that BABA's top line can increase at an average annual rate of 20%, through both organic growth and acquisitions. That would be an impressive growth rate for a company with a market cap of $452 billion.Another metric to pay attention to in August is Alibaba's operating margin, which stood at roughly 18% as of the end of the first quarter. Over the years, BABA's high operating margin has contributed to its profitability, which has been even higher than that of Amazon (NASDAQ:AMZN).However, investors are concerned that Alibaba's profit margins are decreasing. In fact, they are at their lowest levels since the company went public in September 2014. The group's various investments in especially cloud, digital media and food delivery have been pressuring profits. Although these new ventures help BABA expand its ecosystem, they also weigh on the stock's profitability, as these other segments are not yet profitable. The current profit margin stands at 27.7%. Alibaba Stock Is a Leader in E-CommerceAt present, the company's share of the Chinese e-commerce space is over 55% and BABA's core business of online retail contributes to about 85% of revenues.In comparison, Alibaba's closest rival, JD.com (NASDAQ:JD), has about 16% share of the Chinese e-commerce space. On the other hand, in 2018, Amazon's share of online retail marketplace was less than 1%; as a result Amazon is now closing down its Chinese online market.BABA operates through three main ecommerce sites -- Taobao, a Chinese online shopping website; Tmall, a Chinese-language website for business-to-consumer online retail; and Alibaba.com, the group's international trade site. The three sites have hundreds of millions of users globally and host millions of businesses.Alibaba's mobile Monthly Active Users (MAUs) on its e-commerce platforms is now 721 million. Alibaba's core business of e-commerce is highly profitable, as it charges a commission on items sold. The group also sells advertising on its platforms.Alibaba uses Gross Merchandise Volume (GMV) to measure total sales transacted through its platforms. For fiscal 2019, Alibaba's commerce business generated $853 billion in GMV, especially led by the Tmall retail marketplace. GMV on Tmall and Taobao have also increased by 31% and 19%, respectively.It is important to remind our readers that many U.S. companies already use Alibaba's platforms to reach consumers in China, a market that's competitive yet attractive. And the group is aiming to increase its reach further and have more American business list their products on the company platforms. When Alibaba reports in August, BABA shareholders will be interested to analyze the corresponding MAU and GMV numbers.Earlier in 2019, the International Monetary Fund (IMF) warned that China, the world's second-biggest economy, is likely to be slowing down in the rest of the year. However, the e-commerce market in China is still forecast to almost double within the next four years to reach $1.8 trillion. Therefore, even if the Chinese economic growth pauses for a few quarters to come, the country's growth potential is intact.In other words, a potential cooling off in China shouldn't get in the way of a sensible, long-term investing strategy, which BABA stock may offer shareholders. BABA's Cloud Segment Is GrowingWith a population of nearly 1.4 billion people, China is the largest country in the world. A rising middle class leads to higher consumerism, and that bodes well for many industries in China. One of those industries set to benefit is cloud computing.Alibaba's concentrated push deeper into cloud computing is increasingly being compared to the success of Amazon's cloud business. Alibaba Cloud is now the market leader in Asia.On May 15, when BABA released its quarterly results, both sales and earnings exceeded estimates. Investors cheered that BABA's cloud computing revenue soared 76% YoY.Alibaba has over 40% of the public cloud market in China. The market share of Tencent Holdings (OTCMKTS:TCEHY), its biggest competitor, is about 11%.As a result of increased diversification as well as the growth in the cloud space, Alibaba's total revenue is expected to grow by double-digit-percentage rates. Such a growth rate would indeed be impressive for a company with a market cap of $415 billion.Alibaba is now offering data analytics services to third-party businesses through A100, which integrates consumer shopping data into merchants' other services. The data is also becoming increasingly personalized through the use of artificial intelligence (AI). For example, Nestle (OTCMKTS:NSRGY) and Starbucks (NASDAQ:SBUX) have already started using this data analytics service offered by A100. Other merchants have started linking facial-recognition data to A100 so that they can offer personalized solutions to customers as soon as they enter the store. Ant Financial and Alibaba's Fintech EcosystemThe global payments industry is a $100 trillion plus market. And the financial technology (fintech) apps revolution is quickly changing the way traditional banks, credit-card issuers and mobile-payments companies work with businesses as well as their retail customers.Ant Financial Services Group, formerly know as Alipay, is Alibaba's mobile and online payment platform. Alibaba has a 33% stake in Ant Financial, which is an extremely popular mobile payment platform throughout China.The company processes payments between any two users. It further offers a wide range of financial services, such as insurance, credit, loans, credit scoring, and wealth management.China is witnessing the tremendous growth of fintech. At present, Ant Financial and Tencent, Alibaba's biggest rival in this sphere, control about 90% of China's payments market.Ant Financial has now become a powerhouse which many analysts expect may itself become a publicly listed company. The group is valued at over $150 billion.To put it into perspective for our readers, the market caps of Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM) are about $75 billion and $366 billion respectively. Alibaba Is Growing InternationallyFinally, forward-looking investors may want to pay attention to BABA's international growth numbers, too. Currently, more than 90% of the e-commerce giant's sales are made in China. But BABA has investments in start-ups in South Asia and Southeast Asia, too.Southeast Asia is en route to becoming the world's fourth-largest economic region by GDP, and analysts expect its e-commerce sector to expand tremendously within the next decade. Higher incomes and rising internet penetration rates are likely to strengthen these regions' e-commerce markets.Among the start-ups in those regions in which BABA has stakes are Paytm, an Indian digital-payments provider, and Lazada, a Singapore-based e-commerce company that is growing in overseas markets.Aibaba's focus on India is an area that investors may want to pay attention to for the long run. Globally, India is the fastest growing e-commerce market where the annual growth rate is about 50%. Increased smartphone usage as well as advances in delivery infrastructure and logistics are contributing to the increase in revenue. In addition to Paytm, Alibaba has also invested in Big Basket and Zomato in India.BABA is also looking to partner with European companies. Many European companies are still discovering new ways to enter the Chinese market, and BABA may enable them to connect with Chinese customers faster. Ant Financial is also seeking to expand in Europe.The "Amazon of the East" has also set its eyes on moving west through partnerships with European companies, including Vodafone Group (NASDAQ:VOD) in Germany and El Corte Ingles in Spain.International growth will not only help increase the company's bottom line, but it will also enable BABA to diversify away from China, lowering the country-specific macro risk of Alibaba stock. BABA Stock's Upcoming Listing in Hong KongBy the end of year, Alibaba is possibly going to Hong Kong for a second listing. There the company is expected to raise $20 billion.BABA had delisted from Hong Kong in June 2012. Now there is speculation as to why the company wants to move closer to China in a second listing and raise cash. Both the bulls and the bears are debating Alibaba's motives.Is it because BABA management is worried about the trade wars? Can BABA's second listing encourage more Chinese companies to follow Alibaba to Hong Kong? Does Alibaba need the cash for reasons investors do not know yet? Should investors therefore be worried?The exact result of this listing is still hard to pin down. For example, Alibaba has recently announced a one-to-eight stock split. A lower price may lure more Hong Kong-based investors into buying Alibaba stock.However, we do not know how its U.S. shareholders may react. One thing we can probably count on, though, is increased volatility in BABA stock price. Short-Term Technical Analysis for BABA StockAs a result of the impressive run-up of Alibaba stock since early June, BABA's short-term technical indicators have become overextended. Therefore, in July BABA stock has been impacted by profit-taking as it heads into its earnings report season.In the next few weeks, I do not expect BABA stock to regain its recent high of $195.72, which was last seen on May 3. At this point, bulls are not yet in control. Therefore Alibaba shares will need a strong catalyst to make them attractive in the eyes of long-term investors. Instead, depending on headlines regarding the U.S.-China trade war or the interest rate decision by the Fed, I expect BABA stock to trade between $155 and $175.In other words, at the current price of about $167, I find the risk/reward ratio on the long side inadequate. I would not advocate bottom-picking in case of near-term price weakness, but I'd be ready to start building a position around $155 later in the summer.It's almost impossible to time a top and a bottom in the markets. Those who bought at about $195 in early May might not be too happy, but investors who had the courage to step in at the end of 2018 or on the last day of May 2019 are in pretty good shape.If you are an investor with paper profits, maybe you should consider locking in some of those gains now. That said, if you are worried about profit-taking in the short term , then within the parameters of your portfolio allocation and risk/return profile, to protect your profits to date, you may consider placing a stop-loss at about 3%-5% below the current price point.In case of a potential profit taking, short-term moving averages and oscillators would move toward a more neutral reading from the overbought levels we are currently seeing. And long-term investors may prefer to open up positions then.In other words, if you are not yet a shareholder of BABA stock, you may want to wait on the sidelines until you have had a chance to analyze the earnings results.If you already own BABA shares, you may consider hedging your position with at-the-money (ATM) covered calls with Aug. 16 or Sept. 20 expiry.The volatility of Alibaba stock is high, giving it a broad trading range, so short-term traders should proceed with caution. BABA Stock's PEG RatioIn addition to looking at technical analysis charts, I keep an eye on stocks' Price/Earnings to Growth (PEG) ratio. A PEG ratio of one means the market's perceived value of the stock is equal to its anticipated future earnings growth. For example, if a stock had a P/E ratio of 25, and the company's projected earnings growth was 25%, then the PEG ratio would be one.With the PEG number, investors can compare and contrast the relative value of a stock against other stocks. I also compare the change in PEG with the change in a stock's price within a given time-frame to gauge investor sentiment regarding a stock's potential price increase.In 2019, Alibaba stock is up over 20%. Given BABA's current level of earnings growth, Alibaba's PEG of 1.33 is currently high from my perspective. In other words, I regard BABA's stock price of about $167 as somewhat over-stretched. However, please remember that the PEG ratio is just one tool in investors' arsenal. The Bottom Line on BABA StockAlibaba stock offers U.S. investors the chance to invest in the growing Chinese consumer and e-commerce markets. As the company's second decade ends, it is increasingly focusing on becoming a social hub. Alibaba's growth in e-commerce, cloud computing and other investments throughout China and globally make it a disruptor and a sound long-term investment.BABA stock is a fundamentally sound stalwart investment in China as well as in the neighboring regions with further growth prospects, profitability, leadership, stability and proactive management -- factors that are likely to translate into a strong balance sheet and robust bottom line in the rest of the decade.I also believe that most of the negative effects of the U.S.-China trade war have already been priced into Alibaba stock. If the two sides reach a deal that's seen in a positive light this year, BABA stock is likely to rally.The month of June has given Wall Street a glimpse of how powerful BABA's comeback could be: the stock rallied from an intraday low of $147.95 on May 31 to an intraday high of $177.95 on July 1.Therefore long-term investors should possibly view any decline in BABA stock as a good opportunity to get into Alibaba shares. However, traders with a short-term horizon should remember that there might be some profit-taking in the stock ahead of BABA's earnings in August.Investors who are interested in buying into Chinese companies, but do not want to commit all their capital to a single stock such as Alibaba may also consider investing in various exchange-traded Funds (ETFs) that have BABA as a holding, including iShares MSCI China ETF (NASDAQ:MCHI), KraneShares CSI China Internet ETF(NYSEARCA:KWEB) or iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG).As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Best Stocks for 2019: A Volatile First Half * 7 Simple Ways for Young Investors to Invest Their First $1,000 * 6 Stocks to Buy Based on Insider Buying The post Alibaba Stock Is Riding High on Growth in Cloud, Global Operations appeared first on InvestorPlace.
On Monday, major China-focused ETFs ended deep in the red on US exchanges. The iShares MSCI China ETF (MCHI) lost 1.24%.
Beyond the size of the market, JD.com's (NASDAQ:JD) market share may be at risk. The company long has been a distant number two to Alibaba (NYSE:BABA). That said, evidence sprouted that JD.com was taking share, as Luce Emerson wrote back in 2017. However, that no longer appears to be the case, fading one of the declining reasons to buy JD stock.Source: Shutterstock Still, Alibaba is expected to lose market share again. But that share isn't going to JD.com. Rather, smaller rivals like Pinduoduo (NASDAQ:PDD) have stepped in. Additionally, other companies taking advantage of Tencent Holdings (OTCMKTS:TCEHY) app WeChat took market share for themselves.As we've seen in the U.S., technology allows smaller operators to compete head-to-head with massively larger firms. That's likely going to be the case in China as well. Therefore, JD.com stock faces risks as the underlying competition defends its existing turf.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Rising Costs Hurts JD.com StockThe other concern is below the operating line. Part of the reason JD stock has rallied is because margins have expanded, notably in the first quarter. Years of investments have deflated profit, but that's starting to change. With JD heading to real profitability -- analysts expect over $1 in adjusted EPS in 2020 -- investor confidence has risen. * 7 A-Rated Stocks to Buy for the Rest of 2019 The question is whether that can hold. Some signs suggest that it might not. Management said in February that it would add 15,000 employees this year. Those plans appear to have changed.Multiple sources reported in April that the company was cutting 8% of its workforce. Soon afterwards, CEO Richard Liu wrote an internal letter citing huge losses in the company's logistics unit as the rationale for cutting the pay of delivery couriers. Liu elsewhere complained about "slackers" in his business, a complaint that drew scrutiny in the Chinese media. It also sparked discussions on social media amid debates over work-life balance in Chinese tech.To be sure, layoffs aren't necessarily bad news. And they don't mean that JD.com or JD Logistics are headed for declining earnings. JD.com hasn't just reduced its staff and delivery courier pay; it cut 10% of its executive workforce in February. Management explained this as a move to speed decision-making. Some pruning after growth makes sense.But the pressure on the logistics business is worrisome. Logistics is the bread-and-butter of Alibaba, JD.com's key competitor. Margins overall for JD.com are quite low: there's no room for pressure if the company must reverse its pay decision or cut the hours of staff elsewhere. It's not difficult to get the sense that JD.com is pushing its employees as hard as it can. And with adjusted operating margins under 2%, it has little recourse if they push back. The Case for JD StockAgain, this is not to say that JD stock is headed for a flameout. This still is the number-two e-commerce play in a still-growing market at a valuation that looks reasonable.But back above $30, the case does get a bit thinner. Plus, execution becomes more important. Below $20 late last year, JD.com stock was simply too cheap, priced for all but a worst-case scenario.But with the JD stock price more than 50% higher, that's not the case.And there are challenges to watch here. The Chinese economy still may not be that healthy. JD Logistics needs to get better; as Liu himself pointed out, the business only has two years' worth of cash left. Smaller competitors are coming. JD.com has a large enough, and profitable enough, business to thrive in this new environment. Unfortunately, the room for error is not what it used to be.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks to Buy for the Rest of 2019 * 7 Education Stocks to Buy for the Future of Academia * 5 Stocks to Buy as You Rebalance Your Portfolio The post JD Stock Has to Clear the Hurdles Facing Chinese Tech appeared first on InvestorPlace.
Alibaba (NYSE:BABA), the so-called Amazon.com (NASDAQ:AMZN) of China, always generates investor scrutiny. That's especially true at this juncture. After a meteoric rise in 2017 when Alibaba stock finally justified its premium, we're now at an impasse.Source: Shutterstock On one hand, the BABA stock price at nearly $169 represents a 23% swing from the beginning of this year. This is an impressive tally, considering that the 380-stock exchange-traded fund iShares MSCI China ETF (NYSEARCA:MCHI) is up less than 12% during the same period. Also, the SPDR S&P 500 ETF (NYSEARCA:SPY) has gained almost 19% in 2019.But on the other hand, Alibaba stock is almost dead-even with 2018's opening price. In other words, shares of the Chinese e-commerce giant haven't moved for over a year-and-a-half. Obviously, that's not the type of performance you want to see if you're a China bull.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFor comparison sake, Amazon shares are up almost 27% YTD. Extended that period to the January 2018 opener and AMZN shows a 59% increase. * 7 Retail Stocks to Buy That Are Down in 2019 Will BABA stock match or even exceed this track record? Or will stakeholders regret holding on too tightly? Here are three pros and three cons to consider: Pro: Trade War Truce Potentially Benefits Alibaba StockUnless you've been living under a rock, you know that the U.S.-China trade war has weighed heavily on global markets. What appeared as a rapprochement between the top-two economies of the world last year deteriorated into a war of words.However, the recent G20 summit in Japan provided an opportunity for both sides to lay the groundwork for a deal. It was a highly anticipated and tense moment for President Donald Trump and his counterpart President Xi Jinping. Though the two administrations didn't disclose many substantive details, we at least have one critical agreement: both nations will delay escalating tariffs.Unsurprisingly, the BABA stock price responded positively to the developments. Since the beginning of June, shares gained more than 16%. This contrasts sharply with the month of May, when tensions flared and Alibaba shares hemorrhaged 21%.The implication is clear: strong U.S.-China relations equal a healthy Alibaba stock. Pro: Regulations? What Regulations?Invariably, whenever a discussion about Chinese stocks stirs, you'll eventually come across their government's notorious control mechanisms. Let's face it: China has an infamous record for censorship and for cracking down on elements their administration finds disagreeable. Under that environment, you might worry about the longer-term trajectory of the BABA stock price.However, for Alibaba and other Chinese consumer-tech firms, like JD.com (NASDAQ:JD), China offers a more agreeable marketplace. That's because so far, neither the Chinese government nor the general public have shown qualms about their push for products and services featuring artificial intelligence. For instance, facial recognition programs raise concerns about online privacy.These issues stymie American tech giants like Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB). In comparison, Chinese companies have free reign to explore their innovations. Logically, this dynamic has favorable implications for Alibaba stock. Pro: BABA Stock Receives Flagship SupportOne of the things you should understand about Chinese stocks is that this segment is very political. Whereas American companies are largely driven by the profit motive, Chinese blue chips represent both profiteering and patriotism.What do I mean by this? China has very ambitious goals, such as their "Made in China 2025" initiative. If you keep up on geopolitical news, you'll realize that they're not satisfied with merely being big. They want to be the biggest and the baddest, essentially replacing the U.S. from its tech leadership role.This is the reason why the trade war is so heated. We're not just fighting for the here and now. Instead, we're looking decades down the road. As such, you can expect BABA stock to receive maximum support from the Chinese government. Con: Truce Is a "Show Me" NarrativeAlibaba stock may have popped following the G20 summit. Since then, however, shares have not impressed, moving sideways as if seeking more substantive news. I'm not surprised one bit.Quickly, the much-covered trade war truce transitioned into a "show me" narrative, and I can't blame the markets for it. Too many times, we've seen head-fakes in this arena. Late-last year, the global investment community anticipated an eventual trade deal. Instead, we got fiery social media posts from the executive office.Therefore, absent an actual deal, a cloud will hang over the BABA stock price. Because at any point, this unsteady relationship could rapidly soar. And if it does, we've already witnessed how much things can deteriorate. Con: U.S. Has a Credibility CrisisUnderstandably, many equity bulls have held out hope that the U.S. will eventually sign a lasting trade deal with China. Because we live in a globalized economy, we can't afford to think, let alone operate in isolation. And despite rhetoric to the contrary, the uncomfortable truth is that the U.S. and China need each other for growth.That said, the bear case against a trade deal is also very strong. The biggest problem affecting investments like Alibaba stock is that the U.S. has a credibility crisis. Currently, we have a worsening relationship with an increasingly belligerent Russia. We have potential flash-points in North Korea and Iran, despite the Trump administration exercising diplomatic caution. On top of that, our allies generally regard us as unstable.Under that context, President Trump can't afford to show weakness with China. Moreover, the U.S. must keep the Chinese government accountable for their unethical business practices and intellectual property theft. Otherwise, it signals to everyone else that it's open season on the U.S.But obviously, don't expect China to play nice on this issue. Con: Chinese Consumer Market Probably Worse Than You ThinkOne of the biggest headwinds facing Chinese stocks is that you don't really know what you're getting. China has always played fast and loose with their economic figures. Subsequently, more than a few analysts have raised questions about Alibaba's accounting practices. * 10 Stocks That Should Be Every Young Investor's First Choice Even BABA stock isn't what you think it is. As InvestorPlace contributor Will Healy and many others have brought up, BABA is actually a share in a Cayman Islands-based holding company. Generally speaking, though, stakeholders have ignored these warning signs because the China narrative is so remarkable.That could change in the coming years, and maybe a lot sooner than some experts anticipate. Early this year, The New York Times reported that Chinese consumer sentiment slipped noticeably. I really doubt that things changed in half a year: due to China owning the more dependent economy, this prolonged trade war hurts them more than it hurts us. Bottom Line on BABA StockI can appreciate why so many bulls love BABA stock. Essentially, China owns the world's largest market for anything of importance. To win in business means you must win in China. Naturally, Alibaba benefits from home-field advantage.However, the trade war represents a paradigm shift in how the U.S. and others approach this Asian juggernaut. In many ways, President Trump exposed the dirty underpinnings of Alibaba stock. And that's why I think investors should cool off on shares until at least the geopolitical headwind is gone.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks to Buy for the Rest of 2019 * 7 Education Stocks to Buy for the Future of Academia * 5 Stocks to Buy as You Rebalance Your Portfolio The post 3 Pros, 3 Cons for Buying Alibaba Stock appeared first on InvestorPlace.
(Bloomberg) -- Noah Holdings Ltd., one of China’s largest wealth managers, levied accusations of fraud against Camsing International Holding Ltd., the Hong Kong-listed company that said last week its chairman had been detained by police.The asset manager has filed a lawsuit and reported Camsing to regulators in relation to a 3.4 billion yuan ($490 million) asset management product that’s in danger of default, Wang Jingbo, Noah’s chief executive officer and co-founder, said in an internal memo on Monday that was obtained by Bloomberg News. The product’s duration will be extended by as much as one year to ensure repayment, Wang said in the memo, the contents of which were confirmed by a spokeswoman.Camsing, a conglomerate with businesses spanning entertainment and health care, saw its stock plunge 80% in Hong Kong on Monday after the company said Chairman Lo Ching was being held in criminal custody by the Shanghai police. Noah’s shares fell 20% in New York after it said some credit funds managed by one of its affiliates provided “supply chain financing involving third-party companies related to Camsing.”A representative who answered the phone at Camsing’s office in Hong Kong declined to comment. The stock fell another 27% on Tuesday.Chinese investors have seen a slew of recent frauds involving listed companies, including false financial reporting by drugmaker Kangmei Pharmaceutical Co. and fake profits at laminating-film maker Kangde Xin Composite Material Group Co. The incidents are adding to an already stressed credit market: Bonds from at least 56 Chinese companies totaling $40 billion face repayment pressure, according to company and ratings firm statements compiled by Bloomberg.The incident “could significantly hit investor confidence, especially given current high macro-economic uncertainty and low risk appetite among clients,” Citigroup Inc. analysts led by Daphne Poon wrote in a note published on Tuesday.The underlying assets of the product are backed by accounts payable from Beijing JD Century Trade Holdings Ltd. to Camsing, Wang said in the Noah memo. In a statement on Tuesday, JD.com, JD Century Trade’s parent, denied any involvement.“Camsing falsified JD.com’s business contracts, engaging in fraudulent behavior,” a spokeswoman said by email. “We are shocked that this occurred and have been cooperating with the police on this issue.”In a statement on Tuesday, Noah said it had also sued JD.com, the online marketplace operator that Noah said had a longstanding relationship with Camsing. In response, JD.com said the lawsuit was “unmerited” and “severely impacted” its reputation.Citi’s analysts said that downward pressure on the economy could have contributed to the alleged fraud at Camsing. The company has worked with Noah for three years and previously had a good track-record, they said, with more than 6 billion yuan of asset management products having matured and been paid back.Shanghai-based Noah, which directly managed about $25 billion in assets at the end of March, has obtained additional shares of Camsing and its affiliates as collateral, Wang said in the memo. A Chinese court has frozen Camsing’s stock and bank accounts, she said, without providing more details.(Adds additional comments ninth paragraph.)\--With assistance from Zheping Huang.To contact Bloomberg News staff for this story: Evelyn Yu in Shanghai at firstname.lastname@example.org;Jun Luo in Shanghai at email@example.comTo contact the editors responsible for this story: Sam Mamudi at firstname.lastname@example.org, Charlie ZhuFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- China Creation Ventures, an investment outfit founded by former Kleiner Perkins Caufield & Byers partner Zhou Wei, is seeking to raise about $250 million in funding, according to people familiar with the matter.CCV, which was founded in 2017, is planning to raise a second U.S.-dollar fund to focus on early-stage Chinese startups, the people said, requesting not to be named because the matter is private. Yu Yi, a spokeswoman for CCV, declined to comment in a text statement.Zhou counts e-commerce giant JD.com Inc., online podcast and radio service Ximalaya and internet finance platform Creditease among his investments. His venture capital firm, founded together with a team of former KPCB portfolio managers, is mustering more ammunition at a time Chinese startups have struggled to attract backing.Chinese capital-raising is slowing after a five-year surge in VC activity, in part because risk-averse institutions gravitate toward top-tier investment targets while an escalating trade war depresses the world’s No. 2 economy. The value of investments in the country tumbled 77% to $9.4 billion in the second quarter from a year earlier, according to market research firm Preqin.CCV has deployed about-two thirds of its first U.S. dollar fund, which pooled about $200 million. About 90% of those deals were series A investments -- typically the first significant round of venture capital funding -- where it held a board seat, according to a company statement. The firm also operates a 1.5 billion yuan ($218 million) local-currency fund, giving it a total of roughly $400 million of assets under management. With a focus on China and Southeast Asia, CCV has four portfolio companies that are seeking a public offering before the end of 2020, the company said.To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at email@example.comTo contact the editors responsible for this story: Tom Giles at firstname.lastname@example.org, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- China went through a five-year surge in venture capital investment that fostered a new generation of startups from ride-hailing giant Didi Chuxing to TikTok-parent Bytedance Ltd. Now the boom may be over.Venture deals in China plummeted in the second quarter as investors pulled back amid unpredictable trade talks and growing concerns about startup valuations. The value of investments in the country tumbled 77% to $9.4 billion in the second quarter from a year earlier, while the number of deals roughly halved to 692, according to the market research firm Preqin.The second quarter of 2018 marked the peak for China venture deals with a total of $41.3 billion invested. That included a $14 billion round for digital payments giant Ant Financial, $3 billion for e-commerce upstart Pinduoduo Inc. and $1.9 billion for truck-sharing service Manbang Group (known also as Full Truck Alliance Group). By comparison, the largest venture deal in the second quarter of 2019 was a $1 billion investment in JD Health, the health care affiliate of e-commerce provider JD.com Inc.China has never been through a widespread bust like the U.S. did after the dotcom boom, in part because the country’s venture market is so new. Years of steady growth in tech investments resulted in predictable -- and enormous -- profits. Whether the current downturn becomes a painful crash depends in large part on how VCs, entrepreneurs and regulators navigate terrain they’ve never seen before.“We’re seeing real stress in the system for the first time,” said Gary Rieschel, a founding partner at Qiming Venture Partners who has worked in China and the U.S. “We have never seen a downturn in the China market. For 20 years, it’s been pretty much up and to the right.”China’s venture boom began in 2014 when Alibaba Group Holding Ltd. went public in the largest-ever initial public offering, making clear to investors the potential riches in the world’s most populous country. Venture deals tripled that year to more than $17 billion and proceeded to rise every year through 2018 when the total topped $105 billion, almost as much as in the U.S.Along the way, firms like Qiming, Sequoia China, Tiger Global Management and SoftBank Group Corp. fostered some of the most valuable startups in the world. Bytedance, the force behind short-video app TikTok and other addictive services, sports a valuation of $75 billion, the highest anywhere according to CB Insights. Didi, the ride-hailing service that ousted Uber Technologies Inc. from China, was last valued at $56 billion, the second highest.But the rise of China’s tech industry put it squarely in the crossfire of the trade war. The Trump administration has accused China of stealing intellectual property and unfairly subsidizing companies in strategic fields, including semiconductors, artificial intelligence and autonomous driving. In May, the U.S. blacklisted Huawei Technologies Co., preventing the telecom giant from buying American components, and is considering doing the same to a swath of startups.The trade war gives investors one more reason for caution. Valuations had already grown vertiginous. High-profile startups such as smartphone-maker Xiaomi Corp. and delivery giant Meituan Dianping saw their stocks tumble after they went public, reinforcing the impression that private-market valuations had gotten out of hand.So-called sharing economy startups have also tested the patience of their investors. Companies like Didi, Meituan and bike-sharing provider Ofo blitzed the market with heavy subsidies to grab market share from rivals, making up for their losses with venture money. Now there’s skepticism that many such companies will ever turn a profit.“You’re really reaching the end of the shared economy -- this idea of let’s give away services for free and make up for it in volume,” Rieschel said. “Some companies -- Didi is the classic case -- are just not showing any ability to become profitable.”A Didi representative didn’t respond to a message and email seeking comment.Valuations haven’t declined yet in China though. The country’s startups have resisted so-called down rounds, when they raise money at lower valuations than an earlier round. “China entrepreneurs, more than any on the planet, will do unnatural things to avoid a down round,” Rieschel said.Meanwhile, venture firms are pivoting to alternative business models, like enterprise software. Such startups are not only less capital intensive, they are at a stage of development where they require less money.This also may simply be a time when venture investors opt for caution. Given the volatile negotiations between Donald Trump and Xi Jinping, it’s not clear what kind of opportunities China’s tech startups will face in the years ahead or how capital markets will treat the next big IPO filing.“It won’t cost you that much to sit on your hands for a few months,” Rieschel said.\--With assistance from Lulu Yilun Chen.To contact the reporter on this story: Peter Elstrom in Tokyo at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.One tech-focused investor is putting money to work at a record pace as trade tensions and economic-slowdown concerns deflate lofty valuations.All-Stars Investment Ltd. has invested, or increased its stake, in six privately held Chinese technology companies over the past year, seizing on cheaper valuations, Hong Kong-based Chief Investment Officer Richard Ji said. That’s “double or triple” the number of private deals it strikes in a typical year, he said.As China and the U.S. engage in a stop-go trade spat, slowing economic growth in Asia’s biggest economy is damping investor appetite for listed giants such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd., as well as their unlisted peers. The country’s vaunted tech sector is undergoing a period of pain as companies including JD.com Inc. lay off staff and trim costs, while startup investment fizzles.Against that backdrop, Ji sees an opportunity.“The macroeconomic overhang is the worst we’ve seen in 10 years,” he said. “The market has become more rational, and that’s helpful for value investors like us.”Forecast valuations for unlisted Chinese tech firms that plan to go public within three years have dropped at least 20% to 30% versus a year to 18 months ago, Ji said. There have been isolated cases of sharper declines of as much as 50%, he added.All-Stars is targeting firms that can sustain robust growth throughout an economic cycle by helping customers cut costs, improve efficiencies and innovate, Ji, a former head of Asia internet and media research at Morgan Stanley, said.New-Economy ChampionsHong Kong-based All-Stars manages almost $2 billion in hedge and private equity funds that focus on “new-economy champions” in China. The majority is in private equity, including $600 million the group closed in January for a seven-year fund. Unlike early-stage venture capital investors, All-Stars’ private-equity investments focus on more mature companies that are close to public share sales.All-Stars’ new investments include artificial intelligence outfit SenseTime Group Ltd., online financing company Lufax, co-working firm Ucommune and WeDoctor. It added to its investments in Tujia.com, a Chinese rival to Airbnb Inc., and Full Truck Alliance Group, China’s largest truck-sharing platform, Ji said.Besides cheaper valuations, muted sentiment has made it easier to negotiate terms that are more favorable to investors, he said. Having deployed a majority of the money in the $600 million fund, All-Stars plans to tap investors for another private-equity fund in the second half, he said.To contact the reporter on this story: Bei Hu in Hong Kong at email@example.comTo contact the editors responsible for this story: Katrina Nicholas at firstname.lastname@example.org, Peter VercoeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
JD.com stock is trading at $31.19 per share, which is 62.4% above its 52-week low of $31.19 and 22.0% below its 52-week high of $40.04.