Finance
Shares of JD.com are rising after announcing its $5 billion share buyback
JD.com has created an Innovative Retail division that houses its grocery business 7Fresh.
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Hong Kong-listed shares of a Chinese online retailer JD.com climbed 1.2% on Wednesday, outperforming the decline in the US market Hang Seng Index after the company announced a $5 billion buyback late Tuesday.
U.S. listed shares of the company rose 2.24% on Tuesday after the announcement. Both JD.com’s shares in Hong Kong and the US are down about 20% year to date.
By comparison, Hong Kong’s Hang Seng index fell about 0.82% on Wednesday but is up about 4% so far this year.
The announcement marks JD.com’s second buyback this year, following the announcement of a $3 billion buyback in March.
Commenting on the move, Chelsey Tam, senior equity analyst at Morningstar, said the decision to announce the share buyback is “not surprising.” She explained: “It’s a common theme in China when stock prices and growth are low.”
Tam also pointed it out VIP shopanother Chinese e-commerce player that has has expanded its own share buyback program last week.
China’s e-commerce sector has been dogged by a sluggish domestic economy.
Earlier this month, Alibaba’s second-quarter results fell short of expectations at both the top and bottom lines. On Monday, Temu owner Pinduoduo suffered its worst session ever after second-quarter results missed both revenue and earnings per share expectations.
In February, Alibaba announced a $25 billion share buyback after missing revenue targets for the fourth quarter of 2023.
