Financial Trading Blog
China stock recovery
China's "will they, won't they" situation with regard to covid lockdowns has sent Chinese stocks on a rollercoaster, so are things going to normalize now?
Trade the rumor, trade the news
The measures to combat covid in China have dragged on the economy, so there has been a lot of expectation about when they might be lifted. That has led to investors several times trying to guess when that might happen, only to be officially denied. On Friday, China did finally announce changes to its covid policy, but appears to be at least nominally sticking with zero-covid. However, the changes announced are expected to relieve the pressure on many Chinese firms, in particular major retailers. And those are who will be reporting over the next couple of weeks.
Alibaba
The lockdowns have not proven to be a boon for online retailers. The firm makes 71% of its revenue from mainland China, and cloud computing is only 8%. Chinese consumers rather than flock to shop online have preferred to avoid spending. Both top and bottom line for Alibaba are forecast to remain sequentially flat, with earnings of $11.98 on revenue of $208.4B.
Tencent
Alibaba's complicated partner has been facing headwinds since the crackdown on the tech sector. Although there was some positivity about US auditors having access to Chinese firms data, the ongoing dispute over semiconductors is weighing on technological firms. Tencent is expected to have earnings that are basically flat at $0.45 and a similar situation with Revenues at $20.0B.
JD.com
Like its partial owner, Tencent, JD.com has been facing headwinds with Chinese authorities cracking down on gaming. Additionally, Capex expenditure in autonomous tech has weighed on earnings, so traders will be looking for any signs it's about to pay off. There is a wide range of forecasts for earnings, with the average at $4.86. But analysts are much more in agreement that sales will drop quarter-over-quarter to $243.0B.
Baidu
While retail sales might have been impacted, advertising spend appears to remain healthy in China. Hence the largest internet company is expected to see improving revenue to $31.8B, though earnings are expected to lag a bit at $15.43 on account of increasing costs.
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