JD.com reported strong Q1 2024 earnings, beating analyst expectations with an increase in adjusted net income and earnings per share. The company’s total expenses declined significantly due to cuts in research and development and general/administrative expenses. Year-to-date, JD.com has spent $1.3 billion on stock buybacks and plans to buy another $2.3 billion worth of stock through 2027. Revenue increased by 7% to RMB 260 billion, while adjusted net income and EPS also saw significant growth compared to expectations.
Baidu also reported positive Q1 2024 earnings, with core search business revenue increasing by 4% year-over-year. The company’s total operating costs and expenses decreased, while adjusted net income and EPS saw growth, surpassing analyst expectations. Baidu repurchased $229 million worth of shares in Q1 2024. Despite a slight miss in revenue expectations, the company performed well overall and analysts were impressed with the results.
Asian equities rallied following a soft US CPI print, leading to hopes for potential Fed rate cuts as the US dollar declined. Hong Kong experienced a strong rally despite a challenging geopolitical backdrop, with Tencent and Alibaba’s stocks performing well. The addition of Alibaba’s Hong Kong listing to Stock Connect is seen as a significant catalyst for the stock. Real estate and healthcare stocks in Hong Kong also saw gains, with high dividend plays in focus due to a tax waiver for Mainland investors.
In terms of market performance, the Hang Seng and Hang Seng Tech indexes saw gains, with strong volume and positive factors supporting the market. The top-performing sectors were real estate, financials, and communication services, while technology and consumer discretionary sectors saw slight declines. Mainland investors bought a net $508 million worth of Hong Kong-listed stocks and ETFs through the Southbound Stock Connect. Shanghai, Shenzhen, and the STAR Board also experienced mixed performance, with real estate, financials, and technology sectors leading gains.
Overall, the recent stock market rally in China is seen as fundamentally different, with positive performance indicators such as exchange rates, bond yields, and commodity prices. The market is showing resilience and growth potential, supported by strong earnings reports from companies like JD.com and Baidu. Investors are optimistic about the future trajectory of the Chinese market, especially with potential catalysts like the addition of Alibaba’s Hong Kong listing to Stock Connect and positive sector performance in real estate and healthcare.
