JD.com has set up an innovative retail division to house its 7Fresh grocery store.
Bloomberg | Bloomberg |
Shares of a Chinese online retailer listed in Hong Kong JD.com rose 1.2% on Wednesday, outpacing the decline on Hang Seng Index after the company announced a $5 billion share buyback late Tuesday.
The company’s U.S.-listed shares rose 2.24 percent on Tuesday following the announcement. Both JD.com’s Hong Kong and U.S. shares have fallen about 20 percent since the beginning of the year.
In comparison, Hong Kong’s leading index, the Hang Seng, lost around 0.82 percent on Wednesday, but has risen by around 4 percent so far this year.
This announcement is JD.com’s second share buyback this year, following a $3 billion share buyback announced in March.
Reacting to the move, Chelsey Tam, senior equity analyst at Morningstar, said the decision to announce the share buyback was “not surprising.” She explained: “This is a common phenomenon in China when stock prices and growth are low.”
Tam also referred to VIP Shopanother Chinese e-commerce player that expanded its own share buyback program last week.
The Chinese e-commerce sector is suffering from the weak domestic economy.
Earlier this month, Alibaba’s second-quarter results fell short of expectations on both revenue and profit. On Monday, Pinduoduo, the owner of Temu, suffered its worst trading session ever after its second-quarter results fell short of expectations on both revenue and earnings per share.
Back in February, Alibaba announced a $25 billion share buyback after missing its revenue targets for the fourth quarter of 2023.
