JD.com stock closes 3.5% higher in Hong Kong trading debut

HONG KONG (AP) — Chinese e-commerce firm JD.com’s shares gained 3.5% in its debut in Hong Kong on Thursday, after the firm raised $3.9 billion in a share sale.

JD.com's Hong Kong debut coincided with its annual “618” sale, or June 18 online shopping extravaganza. The shopping festival, which JD.com launched to rival Alibaba’s annual November 11 Singles’ Day sales, is the first major e-commerce festival to be held in China since the coronavirus pandemic started.

As of Thursday, JD.com said it had tallied more than $33 billion worth of transactions for the 618 shopping festival, which ends at midnight Beijing time and began on June 1.

The event is being closely watched as a barometer of consumer appetites for spending given pressures from the coronavirus pandemic. China’s economy contracted for the first time in nearly three decades during the first quarter of this year.

Although the 618 shopping extravaganza is held by JD.com, rivals Alibaba and Pinduoduo and other Chinese retailers are also offering discounts.

JD.com is doubling down on live-streaming e-commerce, offering 300,000 live-streams over nearly three weeks that allow buyers to interact with sellers and influencers in real-time and purchase products without ever leaving the video stream. To boost sales, the company is also providing 10 billion yuan ($1.4 billion) in subsidies on top of big discounts and coupons for consumers.

Sales of daily necessities and fresh produce are growing quickly both in China’s big cities and in smaller ones, while home appliances have fared less well, Xu Lei, chief executive of JD Retail, said in an interview in Beijing.

That's partly because of weakness in the property market and partly because coronavirus restrictions can make it difficult for deliverymen to do in-person installations, he said.

JD.com has seen e-commerce growth accelerate due to the pandemic, as consumers shunned physical stores in favor of online shopping. The company is expecting revenue to grow between 20% to 30% this quarter.

The company, which is already listed on the Nasdaq in New York, saw its stock price close at $234 Hong Kong dollars ($30.19) on Thursday, up from its offer price of $226 Hong Kong dollars ($29.16). The stock opened almost 6% above its offer price.

Its debut comes as a growing number of Chinese technology companies choose to list in Hong Kong amid growing regulatory pressures and a worsening of relations between Beijing and Washington that could see Chinese companies cut off from U.S. capital markets.

“When we went public six years ago, our shareholder structure in the capital market at the time was still inclined towards Europe and the U.S. In recent years, although we have had some expansion in our international business, our core users and business of JD.com is still largely on mainland China,” said Xu.

He said the company chose to hold its secondary listing in Hong Kong because it is one of the “world’s freest market economies” and because investors in Hong Kong understand mainland businesses and are very “mature" and “stable."

“We think that because of consumers in Asia and the retail and internet industry, investors will be more familiar with our development and improvements each year. We hope to have some changes in terms of the investors in our company’s capital structure,” he said.

Last week, Chinese gaming firm NetEase debuted in Hong Kong, raising about $2.7 billion with its stock closing 6% higher on the first day of trading. NetEase is also listed in New York. Its shares have fallen about 6% since then.

Alibaba Group Holding held a secondary listing in November in Hong Kong that raised more than $13 billion in the largest initial public offering of 2019.

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AP video producer Olivia Zhang in Beijing contributed.