China’s tech giants fight back as slowdown takes toll

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Strike 1: Alibaba (BABA, NYSE) last month posted its slowest quarterly revenue growth since going public in 2014. Strike 2: JD.com (JD, NDAQ) recently reported its weakest revenue growth in six quarters. Strike 3: Pinduoduo‘s (PDD, NDAQ) fourth quarter revenue fell well below analysts’ estimates after reporting a meager 3% year-over-year rise last week.

And just like that, China’s ecommerce titans were bowled out in a single sweep by the nation’s slowing economy. Headwinds from Covid-19 outbreaks, an uncertain geopolitical climate, rising fuel prices, and a downturn in the country’s property sector has left consumers cutting back on discretionary expenses.

Of course, consumer discretionary spending is not limited to just ecommerce, so that can only mean it is not the only sector feeling the effects of China’s economic slowdown. Tencent Holdings (0700, HKG) can attest to that. The social media and gaming giant’s revenue grew 8% in the fourth quarter – its slowest pace since going public in 2004.

Image credit: Timmy Loen

The world’s second-largest economy is reeling, and the government has perched up and taken notice. Vice Premier Liu He’s recent comments, which indicated that Beijing would roll out support for the economy and stabilize the markets, ignited a rally in China’s battered stocks.

Shares of Alibaba, JD.com, and Pinduoduo were among the many Chinese stocks to benefit from a switch in regulatory tone from President Xi Jinping’s administration as they finished the last fortnight up around 30%, 25% and 38%, respectively.

It is not only China’s government looking to revitalize investor sentiment around its tech companies. Alibaba and Xiaomi Corp (1810, HKG) have turned to share buybacks to reward its shareholders after a horrendous performance in their share prices over the last year.

Xiaomi will repurchase shares of up to HK$10 billion (US$1.29 billion) after its shares lost roughly a third of their value over the past six months. Meanwhile, Alibaba, whose shares plunged by over 50% in value in the last year, upsized its buyback program from US$15 billion to US$25 billion.

— Shravanth

4 Stocks to watch

Hot stocks, earnings reports, restructuring, activist investor pressure, and more. We feature the stocks that are likely to make big moves during the week.

Image credit: Timmy Loen

🇮🇩 Bukalapak (BUKA, IDX): While much of the spotlight has fallen on its investments in banking and retail, Bukalapak is preparing for a serious venture into gaming. The Indonesian ecommerce behemoth has been on an M&A spree since its US$1.5 billion IPO last year, acquiring Itemku, an online marketplace for game-related digital products, and investing in Yield Guild Games Southeast Asia, a blockchain gaming startup.

3 Market whispers

2 Eye-popping facts 👀

The 1 you didn’t see coming