JD.com Skyrockets In Hong Kong Share Sale

Chinese e-commerce company JD.com raises nearly $4bn after its stock market debut at the Hong Kong Stock Exchange on Thursday 16th July 2020. In early trading, the online retail group gained as high as 5.8 per cent to reach HK$239 ($30.84) per share. This event marks the second-largest share sale this year.

Who Are JD.com?

As China’s largest retailer, JD.com covers everything from fresh food and apparel to electronics and cosmetics. Known for their widely distributed next-day delivery service and a zero-tolerance policy on counterfeit goods, they seek to control both the supply chain and marketplace of their products.

Founded in 2004, they are driven by innovations in technology, leading in sectors such as cloud computing, e-commerce and smart technology. This sale share in the Hong Kong Stock Exchange represents around 4.3 per cent of JD.com’s total shares.

Why Is This Important?

JD.com is now one of several large companies based in China currently listed in Hong Kong on the so-called “homecoming” listing. In the week before JD.com’s debut on the Hong Kong Stock Exchange, technology and gaming company NetEase similarly raised $2.7bn.

This opening was especially strong on the stock exchange. These are companies seeking to create secondary listings closer to home, and NetEase and JD.com are Nasdaq listed technology giants that are two among many.

This wave of listings reflects the rising tensions in a trading dispute between the US and China. Exacerbated by the outbreak of COVID-19 and the global pandemic’s economic effects, US-listed Chinese companies are facing increasing scrutiny following the Luckin Coffee accounting scandal.

Luckin Coffee revealed around $310m fabricated transactions from the second quarter of 2019. These events undermined their recently acquired reputation as one of the only successful debuts of Chinese company’s on the US stock market in 2019.

What Does This Mean Going Forwards?

With the success of JD.com and its fellow companies in creating secondary listings, we will likely see a renewed interest in Hong Kong’s stock market from Chinese companies. However, the concern for the business climate in the city after Beijing’s imposition of national security law accompanies this revived interest.