Week in Review
- Asian equities were mixed but rangebound for the week as Hong Kong and Japan were slightly higher and Mainland China was slightly lower.
- It was a busy week for internet earnings as Baidu, Tencent, and Alibaba all beat estimates on Q1 revenue.
- China’s April economic release came in below sky-high estimates though retail sales increased by over +18% year-over-year.
- There were a couple of “green shoots” on the geopolitical front this week as China’s diplomatic team met with Ukrainian leaders in Kyiv and Biden indicated that he will speak with Xi at some point after tackling the debt ceiling, that is.
Friday’s Key News
Asian equities ended a mixed week largely higher though Hong Kong was off following yesterday’s sell-off in US-listed China stocks.
Following strong results and guidance from JD.com, Baidu, and Tencent, expectations likely rose for Alibaba, which increased revenue by +2% year-over-year in Q1 with strong upticks in adjusted net income and EPS. Due to the company’s Hong Kong listing, it cannot officially provide forward guidance, though some cited a conservative/tepid outlook as a culprit for the stock’s underperformance while giving away the cloud business to shareholders struck some as surprising. Like sell-side analysts’ reports coming out post-earnings, I felt Alibaba’s moves to unlock shareholder value should be cheered. Maybe paying dividends would motivate investors rather than buying back stock. The move would also stick it to short sellers, who would be forced to pay the dividend.
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