JD.com Earnings Review

E-commerce giant JD.com (JD US, 9618 HK) reported Q4 financial results post-the Hong Kong close/pre-US market open that beat analyst expectations. JD Retail revenue increased 14.7% for the quarter and 7.5% for the year. The company noted the “increasing demand” for electronics and home appliances for

• Revenue increased +13.4% to RMB 347B ($47.5B) versus expectations of RMB 332B and Q4 2023’s RMB 306B
• Adjusted net income RMB 11.3B ($1.5B) versus expectations of RMB 9.283B and Q4 2023’s RMB 8.41B
• Adjusted EPS RMB 7.42 ($1.02) versus expectations of RMB 6.18 and Q4 2023’s RMB 5.30
• Q1 2024 Revenue forecast of RMB 276B was in line with expectations.
• The company will utilize $1.5B of cash to pay a dividend of US $0.5 per ordinary share, or US $1.0 per ADS.
• The company repurchased approximately 255.3 million Class A ordinary shares (equivalent to 127.6 million ADSs) for approximately $3.6 billion during the year ended December 31, 2024.
• The total number of shares repurchased by the Company for the year ended December 31, 2024, amounted to approximately 8.1% of its ordinary shares outstanding as of December 31, 20233.
• The Company may repurchase up to $5.0 billion worth of its shares (including ADSs) over the next 36 months through the end of August 2027.

The heads of the National Development and Reform Commission (NDRC), CSRC (China’s SEC), PBOC, Ministry of Finance (MoF), and Ministry of Commerce (MoC) held a press conference during the 14^th National People’s Congress. This press conference went very well, as we experienced a few underwhelmed post-September stimulus press conferences. This one overwhelmed me! The lack of Western media coverage shows how well it went! Below are summaries of their statements.

Zheng Gangjie of the National Development & Reform Commission (NDRC):

• “Confident” of GDP target of 5%, China’s GDP contributed 30% of global growth, support hi-tech industries
• Chinese automakers manufactured 13 million EVs, accounting for 60% of global production
• Trade in the subsidy plan will be increased from RMB 150B in 2024 to RMB 300B in 2025
• “special action plan for boosting consumption will soon be released and implemented” – a bit of a surprise here as it insinuates more to come!
• “Action Plan for Boosting Consumption” will be “announced soon.”

Lan Fuan of the Ministry of Finance (MoF)

• “More proactive fiscal policy” emphasized the term “more positive,” which was used for the 1^st time, “which can be understood as continuous effort and more power.”
• “The deficit ratio is arranged at 4%, and the deficit scale reaches CNY 5.66 trillion, an increase of CNY 1.6 trillion from last year.”
• “The general public budget expenditure nationwide was CNY 29.7 trillion, an increase of 4.4% over last year.”
• RMB 1.3T of ultra-long government bonds issued for “two major” projects and implement the “two new” policies,” RMB 500B for SOE banks to raise Tier 1 capital, new government bond issuance will increase RMB 2.9T to RMB 11.86T to “cover the deficit.”
• Focus on cleaning up local government debts, including RMB 2T earmarked for local government debt replacement
• Government support for “key areas,” including “national education expenditure, social security, and employment expenditure were all close to CNY 4.5 trillion, with growth rates of 6.1% and 5.9% respectively;” 

Wang Wentao of the Ministry of Commerce (MoC)

• “2024 Social Consumer Retail Sales Total At CNY 48.3 trillion, a year-on-year increase of 3.5%.”
• “Consumption remains the first driver of economic growth,” however
• “We should also see that the problem of insufficient domestic demand and insufficient release of consumption potential is still prominent.” – an essential acknowledgment of challenges
• “China always believes that the essence of the Sino-US economic and trade relations is mutually beneficial and win-win.”

Pan Gongsheng of the People's Bank of China:

• “Monetary policy is loose.”

• Bank reserve requirement ratio and interest rates “will be reduced” when domestic and foreign conditions allow – assume this means when the US Fed cuts!
• Keep CNY stable
• Increase “scale of re-lending” to RMB 800B to RMB 1T to support “scientific and technological innovation”

Wu Qing of China Securities Regulatory Commission (CSRC):

• Spoke to implementation of the “Nine National Guidelines,” which support the stock market, promote M&A, crack down on fraud, and promote new fund and ETF launches
• PBOC facilitated RMB 100 billion worth of loans for companies to do buybacks, with 400 companies disclosing buybacks
• Insurance and pension funds bought RMB 290 billion worth of Mainland stocks since last September

Key News

Asian equities had a strong night, led by Hong Kong and Mainland China, as numerous countries posted +1% returns, though Taiwan, Australia, Malaysia, and Thailand were off. As my colleague Kyle succinctly said, “The world’s second-largest economy is stimulating.”

Hong Kong and the Mainland market had high volumes and strong breadth (i.e. advancers versus decliners). The most-traded Hong Kong-listed stock overnight was Tencent, which gained +7.62%, trading HKD 42 billion today, which is 10X the pre-stimulus levels. 10X! The NPC press conference's consumption and tech/AI focus were a key catalyst.

Alibaba gained +8.39% after announcing its QwQ-32B model had “comparable performance” to DeepSeek. In China, there was a lot of talk about a new AI player named Manus, who claimed to have even stronger performance than OpenAI.

The Hang Seng and Hang Seng Tech indexes gained +3.29% and +5.40%, respectively, on volume that increased +45.79% from yesterday, which is 242% of the 1-year average. 403 stocks advanced, while 96 declined. Main Board short turnover increased by +35.92% from yesterday, which is 229% of the 1-year average, as 14% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The growth factor and large caps outperformed the value factor and small caps. The top-performing sectors were Communication Services, which gained +7.44%, Consumer Discretionary, which gained +6.04%, and Real Estate, which gained +4.38%. Meanwhile, the worst-performing sector was Utilities, which fell -0.31% and was the only negative sector. The top-performing subsectors were consumer services, media, and software. Meanwhile, construction materials, steel, and coal were among the worst-performing subsectors. Southbound Stock Connect volumes were high. Mainland investors bought +$840 million worth of Hong Kong-listed stocks and ETFs, led by Xiaomi, Kuaishou, China Mobile, and Alibaba were large net buys; Li Auto, a small net buy; Tencent, SMIC, Meituan small net sales; CNOOC Finance, a moderate net sell.

Shanghai, Shenzhen, and the STAR Board gained +1.17%, +1.81%, and +3.48%, respectively, on volume that increased +27.65% from yesterday, which is 164% of the 1-year average. 4,229 stocks advanced, while 763 stocks declined. The growth factor and large caps outperformed the value factor and small caps. The top-performing sectors were Communication Services, which gained +3.62%, Information Technology, which gained +3.14%, and Real Estate, which gained +2.47%. Meanwhile, Utilities fell -0.55% and made up the only negative sector. The top-performing subsectors were internet services, software, and cultural media. Meanwhile, highways, banking, and motorcycles were among the worst-performing subsectors. Northbound Stock Connect volumes were above average. CNY and the Asia Dollar Index both fell versus the US dollar. Treasury bonds fell. Copper and steel rose.

Last Night's Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	3.3%
Hang Seng Tech	HSTECH Index	5.4%
Hong Kong Turnover	HKTurn Index	45.8%
HK Short Sale Turnover	HKSST Index	35.9%
Short Turnover as a % of HK Turnovr	N/A	14.5%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	840	0
China (Shanghai)	SHCOMP Index	1.2%
China (Shenzhen)	SZCOMP Index	1.8%
China (STAR Board)	Star50 Index	3.5%
Mainland Turnover	.chturn Index	27.6%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	1.1%
Japan	NKY Index	0.8%
India	SENSEX Index	0.8%
Indonesia	JCI Index	1.3%
Malaysia	FBMKLCI Index	-0.4%
Pakistan	KSE100 Index	1.5%
Philippines	PCOMP Index	1.6%
South Korea	KOSPI Index	0.7%
Taiwan	TWSE Index	-0.7%
Thailand	SET Index	-1.4%
Singapore	STI Index	0.5%
Australia	AS51 Index	-0.6%
Vietnam	VNINDEX Index	1%

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	152	4.55
Communication Services	9	7.44
Consumer Discretionary	30	6.04
Consumer Staples	13	1.76
Energy	7	0.06
Financials	23	1.42
Health Care	13	0.68
Industrials	19	0.98
Information Technology	10	2.53
Materials	10	2.21
Real Estate	6	4.38
Utilities	12	-0.31
Mainland China Listed	432	1.46
Communication Services	9	3.63
Consumer Discretionary	31	1.42
Consumer Staples	27	2.04
Energy	16	0.14
Financials	63	0.94
Health Care	40	1.48
Industrials	69	0.76
Information Technology	85	3.15
Materials	68	0.94
Real Estate	7	2.48
Utilities	17	-0.54

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	7.6
Alibaba HK	9988 HK Equity	8.4
JD.com HK	9618 HK Equity	8.4
NetEase HK	9999 HK Equity	4
Yum China HK	9987 HK Equity	1.5
Baozun HK	9991 HK Equity	3.8
Baidu HK	9888 HK Equity	4.2
Autohome HK	2518 HK Equity	3.9
Bilibili HK	9626 HK Equity	6.3
Trip.com HK	9961 HK Equity	5.1
EDU HK	9901 HK Equity	4.1
Xpeng HK	9868 HK Equity	4.9
Weibo HK	9898 HK Equity	6.7
Li Auto HK	2015 HK Equity	0.5
Nio Auto HK	9866 HK Equity	3
Zhihu HK	2390 HK Equity	6.9
KE HK	2423 HK Equity	10.5
Tencent Music Entertainment HK	1698 HK Equity	8.9
Meituan HK	3690 HK Equity	5.1

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
TENCENT HOLDINGS LTD	7.6
ALIBABA GROUP HOLDING LTD	8.4
XIAOMI CORP-CLASS B	1.3
MEITUAN-CLASS B	5.1
KUAISHOU TECHNOLOGY	15.7
BYD CO LTD-H	3.6
SEMICONDUCTOR MANUFACTURING	2.5
HONG KONG EXCHANGES & CLEAR	5.2
JD.COM INC-CLASS A	8.4
CK HUTCHISON HOLDINGS LTD	9.4

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
TALKWEB INFORMATION SYSTEM-A	6.2
EAST MONEY INFORMATION CO-A	4.1
SERES GROUP CO L-A	6.5
CAMBRICON TECHNOLOGIES-A	8.9
MERIT INTERACTIVE CO LTD-A	0.7
ZTE CORP-A	2.7
BLUEFOCUS INTELLIGENT COMM-A	20
CONTEMPORARY AMPEREX TECHN-A	1.3
SHENZHEN EVERWIN PRECISION-A	6.1
CHINA UNITED NETWORK-A	4.3

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 7.24 versus 7.26 yesterday
• CNY per EUR 7.82 versus 7.76 yesterday
• Yield on 10-Year Government Bond 1.75% versus 1.71% yesterday
• Yield on 10-Year China Development Bank Bond 1.76% versus 1.72% yesterday
• Copper Price +1.30%
• Steel Price +0.18%