JD.com Earnings Review

JD.com (JD US and 9618 HK) released Q1 financial results after the Hong Kong close that beat estimates on the big three: revenue, adjusted net income, and adjusted EPS. JD’s new food delivery business appears to be off to a strong start, though it will raise concerns about expenses and the firm’s desire to build market share at the expense of profits. JD’s E-Commerce focus on electronics and home appliances increased sales by +17.1% to RMB 144.3 billion ($19.884 billion).

• Revenue increased +15.8% to RMB 301.1 billion ($41.5 billion) from RMB 260 billion, versus expectations of RMB 290.3 billion
• Adjusted Net Income increased to RMB 12.8 billion ($1.8 billion) from RMB 8.9 billion, versus expectations of RMB 10.37 billion
• Adjusted EPS increased to RMB 8.41 ($1.16) from RMB 5.65 versus expectations of RMB 7.02
• Company repurchased a total of approximately 80.7 million Class A ordinary shares (equivalent to 40.4 million American depositary receipts (ADRs)) for a total of approximately $1.5 billion

Key News

Asian equities were mixed overnight as Malaysia, the Philippines, and Japan outperformed. Meanwhile, Hong Kong and India underperformed while Indonesia was closed for Vesak Day, a celebration of the life and Enlightenment of the Buddha.

Hong Kong-listed growth stocks and subsectors, including internet, semiconductors, the Apple ecosystem, i.e., technology hardware and electronics, and electric vehicle (EV) stocks were all hit with profit-taking after yesterday’s better-than-expected US-China trade talks led to substantial gains. Concerns that China's government will not stimulate the economy as aggressively due to the US-China trade deal and uncertainty around the deal's timing appeared to be concerns, though simply “the sell the rips and the buy dips” mentality likely led to quick profit taking. China's government’s focus on raising domestic consumption and real estate prices is likely to continue, regardless of the status of the trade deal. Ironically, President Trump mentioned that China should increase domestic consumption to buy more US goods.

Hong Kong volumes were down -31% from yesterday, though Mainland investors were net buyers of Hong Kong-listed stocks and ETFs via Southbound Stock Connect. Today’s move lower put the Hang Seng, Hang Seng Tech, Shanghai, and Shenzhen indexes back at their Liberation Day levels.

Healthcare stocks in Hong Kong and Mainland China rebounded after Trump's announcement yesterday on capping drug prices. The lack of movement in the Mainland market shows that domestic issues, as opposed to foreign matters, are weighing on local sentiment. Mainland China-listed equities continue to lack animal spirits as investors want more stimulative economic policies, despite the government’s efforts.

Tencent reports after the Hong Kong close tomorrow. Alibaba, KE Holdings, and NetEase all report on Thursday.

Last Night's Performance

Country / Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	-1.9%
Hang Seng Tech	HSTECH Index	-3.3%
Hong Kong Turnover	HKTurn Index	-31.8%
Hong Kong Short Sale Turnover	HKSST Index	-40.5%
Short Turnover as a % of Hong Kong Turnover	N/A	12%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	-201.3
China (Shanghai)	SHCOMP Index	0.2%
China (Shenzhen)	SZCOMP Index	-0.2%
China (STAR Board)	Star50 Index	-0.2%
Mainland Turnover	.chturn Index	-1.4%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	-0.5%
Japan	NKY Index	1.4%
India	SENSEX Index	-1.6%
Indonesia	JCI Index	0.1%
Malaysia	FBMKLCI Index	2.3%
Pakistan	KSE100 Index	1.1%
Philippines	PCOMP Index	1.7%
South Korea	KOSPI Index	0%
Taiwan	TWSE Index	0.9%
Thailand	SET Index	0.3%
Singapore	STI Index	0.1%
Australia	AS51 Index	0.4%
Vietnam	VNINDEX Index	0.8%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	120	105
Advancing Stocks	153	2110
Declining Stocks	313	2778
Outperforming Factors	Dividend Yield, Low Volatility, Value	Value, Low Volatility, Dividend Yield
Underperforming Factors	Liquidity, Momentum, Growth	Momentum, Liquidity, Quality
Top Sectors	Healthcare, Materials	Healthcare, Energy, Financials
Bottom Sectors	Tech, Discretionary, Communication	Staples, Discretionary, Tech
Top Subsectors	Consumer Durables/Apparel, Household/Personal Products, Consumer Services	Marine, Port, Daily Chemical
Bottom Subsectors	Tech Hardware, Semis, Auto	Aerospace/Military, Motorcycle, Heavy Machinery
Southbound Connect Buys	Alibaba, CNOOC Finance, UBTech Robotics (Small)
Southbound Connect Sells	Meituan, SMIC, Tencent, Xiaomi (Small)

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	151	-2
Communication Services	9	-2.34
Consumer Discretionary	28	-3.3
Consumer Staples	13	-0.52
Energy	7	-0.13
Financials	23	-0.08
Health Care	13	1.12
Industrials	20	-1.21
Information Technology	10	-3.78
Materials	10	0.35
Real Estate	6	-0.15
Utilities	12	-0.01
Mainland China Listed	404	0.37
Communication Services	6	-0.09
Consumer Discretionary	31	-0.14
Consumer Staples	24	-0.24
Energy	13	0.87
Financials	64	0.83
Health Care	31	1.05
Industrials	64	0.39
Information Technology	91	-0.1
Materials	58	0.64
Real Estate	6	-0.01
Utilities	16	0.51

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	-2.2
Alibaba HK	9988 HK Equity	-3.9
JD.com HK	9618 HK Equity	-2.1
NetEase HK	9999 HK Equity	-3
Yum China HK	9987 HK Equity	1.1
Baozun HK	9991 HK Equity	10.4
Baidu HK	9888 HK Equity	-1.7
Autohome HK	2518 HK Equity	0.7
Bilibili HK	9626 HK Equity	-3.1
Trip.com HK	9961 HK Equity	-0.1
EDU HK	9901 HK Equity	1.2
Xpeng HK	9868 HK Equity	-5.3
Weibo HK	9898 HK Equity	-2.8
Li Auto HK	2015 HK Equity	-3.1
Nio Auto HK	9866 HK Equity	-5.2
Zhihu HK	2390 HK Equity	0.6
KE HK	2423 HK Equity	-0.6
Tencent Music Entertainment HK	1698 HK Equity	-4.4
Meituan HK	3690 HK Equity	-4.9

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
ALIBABA GROUP HOLDING LTD	-3.9
TENCENT HOLDINGS LTD	-2.2
XIAOMI CORP-CLASS B	-3.9
MEITUAN-CLASS B	-4.9
BYD CO LTD-H	-4.8
SEMICONDUCTOR MANUFACTURING	-4
UBTECH ROBOTICS CORP LTD	5.7
HONG KONG EXCHANGES & CLEAR	-2.7
CHINA CONSTRUCTION BANK-H	0.1
JD.COM INC-CLASS A	-2.1

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
LUXSHARE PRECISION INDUSTR-A	-0.9
AVIC CHENGDU AIRCRAFT CO L-A	-7.4
EOPTOLINK TECHNOLOGY INC L-A	2.7
EAST MONEY INFORMATION CO-A	-1.2
TALKWEB INFORMATION SYSTEM-A	2.5
CONTEMPORARY AMPEREX TECHN-A	0.7
ZHONGJI INNOLIGHT CO LTD-A	-0.9
GUANGDONG TOPSTAR TECHNOLO-A	2.3
BYD CO LTD -A	-1
WANXIANG QIANCHAO CO LTD-A	5

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 7.20 versus 7.21 yesterday
• CNY per EUR 7.99 versus 8.02 yesterday
• Yield on 10-Year Government Bond 1.67% versus 1.69% yesterday
• Yield on 10-Year China Development Bank Bond 1.70% versus 1.72% yesterday
• Copper Price -0.19%
• Steel Price +1.21%