Just as China’s beleaguered tech stocks put the worst of their regulatory blues behind them, a new threat is emerging as firms intensify the battle for business at home.
A report this week said JD.com Inc. rival PDD Holdings Inc. is launching a subsidy campaign to fight back against the advances of the U.S. sent new shockwaves through the sector, slamming shares of both firms and their larger e-commerce rival. alibaba group holding Ltd. The three companies lost $33 billion in market value in US trading on Tuesday, according to data compiled by Bloomberg.
Steps taken by Beijing to roll back its harsh crackdown on the tech sector were well received by investors in the back half of last year, but that optimism is now starting to wane. Instead, markets are fretting about costly price wars and fresh rounds of cash as companies that are struggling to expand internationally intensify rivalry at home.
“With opportunities for Chinese Internet companies overseas, it will be harder for them to do business and make acquisitions overseas,” said Robert Li, an analyst with Bloomberg Intelligence. “So they will focus more on the domestic market.” development, as a result of increased competition, including pricing.
It’s not just JD’s planned 10 billion-yuan ($1.5 billion) subsidy campaign that is ruffled feathers. Meituan’s moves to hire 10,000 people on the mainland were seen as an attempt to fend off increased competition from new entrants such as ByteDance Ltd’s Douyin in the $145 billion Chinese food sector. Moving away from online commerce, NetEase Inc. And MiHoYo is ramping up its fight against gaming leader Tencent Holdings Ltd.
To be sure, analysts still bullish see hardly any sell recommendations for JD or its core peers. Citigroup Inc. According to Alicia Yap, JD has a track record of spending prudently and can be expected to offer sensible promotions. With Its Profit Margin Already the Lowest in the Nasdaq Golden Dragon China With the index expected to slip further, the firm has limited room for manoeuvre.
PDD fell 1.3% and JD 1.4% in New York on Wednesday.
For some investors, the effects of increased competition on companies’ bottom lines and financials are of greater concern.
Wu Yufeng, a fund manager at Wenzhou Jia Yue, said: “There is still a lack of clarity on what is considered acceptable and what is not for tech giants, and fierce competition is pushing these firms to do extreme things.” can inspire.” Investment management company. “No one can tell what these companies will do to market share and at what point the authorities will say ‘enough’. This is a source of concern.”
Amazon. Big tech stocks are on track for their strongest rally over the next 12 months after weak results from Com Inc and Alphabet Inc, according to data compiled by Bloomberg. Meanwhile, a stellar rally in Tesla Inc shares, which doubled at one point from January’s lows driven by interest from retail investors and better-than-expected results, leaves hardly any room for further gains, data show Show.
The text of this story is published from a wire agency feed without any modification. Only the headline has been changed.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.