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What impact would JD.com’s Hong Kong IPO have on US share price?

Chinese e-commerce company JD.com has priced its upcoming Hong Kong public offering on 18 June 2020 at a maximum rate of HK$236 (US$30.45) per share. The company plans to issue a total of 133 million shares – 95% of shares are reserved for overseas investors, while 5% are for Hong Kong residents – in this…

Chinese e-commerce company JD.com has priced its upcoming Hong Kong public offering on 18 June 2020 at a maximum rate of HK$236 (US$30.45) per share.

The company plans to issue a total of 133 million shares – 95% of shares are reserved for overseas investors, while 5% are for Hong Kong residents – in this secondary flotation, it said in a filing to the US Securities and Exchange Commission (SEC). This would raise roughly HK$31.4 billion (US$4.05 billion).

If the underwriters of the deal – which include UBS, Bank of America and more than ten other investment banks – choose to exercise an over-allotment option in the event of oversubscription, this would bring the total amount of shares sold to as high as US$4.3 billion.

The planned share sale price represents a 48.6% discount from JD.com’s most recent American depository shares closing price of US$59.29 as of Monday 08 June 2020, based on IG trading data.

The company said it plans to pump the raised capital into improving supply chain technology and operating efficiency.

IG is a world-leading online trading and investments provider for thousands of financial markets. With CFDs, you can buy long or sell short on JD.com, Alibaba, Tencent and other Chinese tech stocks depending on whether you think prices will rise or fall. Start today by opening an IG account.

Connection between Hong Kong listing and existing ADS shares

JD.com’s launch on the Hong Kong bourse comes in the midst of growing tensions between the US and China, a development that many fear could lead to the delisting of Chinese companies across US stock exchanges.

Last month, the Nasdaq issued a delisting notice to Chinese coffee house chain Luckin Coffee after the company admitted to fabricating aggregate sales figures amounting to some 2.2 Chinese billion yuan.

Following that, the US Senate recently unanimously passed a bill that requires Chinese companies listed on American stock exchanges to submit audits for inspection by the Public Company Accounting Oversight Board. Failure to do so will result in ‘deceitful Chinese companies’ being ‘kicked off US exchanges’, co-sponsors of the bill were quoted as saying by CNN.

JD.com in its SEC filing, also cited such regulatory concerns, stating: ‘Enactment of any of such legislations or other efforts to increase US regulatory access to audit information could cause investor uncertainty for affected issuers, including us, the market price of our (US shares) could be adversely affected, and we could be delisted if we are unable’ to meet requirements in time.

Chinese gaming company NetEase, which announced a secondary Hong Kong listing at the same time as JD.com, also expressed similar sentiments in its SEC prospectus.

Gain access to JD.com, NetEase and thousands of shares via IG’s world-leading trading and investments platform. With CFDs, you can buy long or sell short on Chinese tech stocks depending on whether you think prices will go. Start today by opening a live or demo IG account.

Implications on JD.com’s US share price

For now, it appears that the Hong Kong listing is helping to boost the e-commerce giant’s US share prices.

On Monday 08 June, the company’s ADS opened 3% higher, as the Hong Kong share sale made weekend headlines.

On a forward-looking basis, IG Asia analyst Pan Jingyi says an uptrend remains in place for the JD.com stock, with prices having adopted a steeper rally trajectory through May 2020 and into June.

‘Prices had clearly broken past the resistance at US$55.90 levels that had previously stalled gains, and is eyeing a break of the US$60 handle at present. Although prices are again showing signs of being overbought on the relative strength index (RSI) indicator, the upward momentum remains intact,’ Pan posits.

However, she further notes that declining trade volume at the start of June suggests that prices may consolidate in the immediate short term before continuing in the uptrend again, ‘though any news trigger here could just be factors propelling a challenge of the US$60 handle’.

Read more: Why did JD.com’s share price soar to a 2.5-year high despite lower earnings?

How to trade Chinese tech stocks with IG

Are you bullish or bearish on JD.com, NetEase and other Chinese tech stocks? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs in a few easy steps:

  • Create a live or demo IG Trading Account or log in to your existing account
  • Enter <company name> or <ticket code> in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade
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Industry News

School4Trading Review – How to Spot Possible Forex Broker Fraud

School4trading Review

School4Trading Review – How to Spot Possible Forex Broker Fraud

In this School4trading Review, we will look at the features of the software, as well as the customer support. First, let us look at the interface. The design is simple and easy to navigate. It also provides a chatbot, which helps you to communicate with the broker. The customer service is warm and inviting, which is a hallmark of a good broker. In contrast, a fraudulent broker will use cold and impersonal customer support to lure people in.

Another problem with the system is that the login process is not always intuitive. You may have to retype your password several times to get in. Then, you may experience difficulties withdrawing your funds or accessing your account. In such cases, you might have to wait for days or even weeks before you can withdraw the money you’ve invested. This is not a good sign. It’s better to choose a different trading platform altogether.

If you’re having trouble logging in, you should also check the legitimacy of the broker. Whether the broker is licensed by a reliable regulatory body or closed down, you’ll want to be sure it’s legitimate. If the broker isn’t licensed by the right body, don’t trust him. You shouldn’t waste your time with an inexperienced company. This will only cause you problems in the long run.

The next factor that should be checked is the licensing. A legitimate broker will have a license from a high regulatory body. However, a broker without a license will be unreliable. Moreover, a reliable regulator will take away the license of a scam broker. As a result, a trustworthy School4Broker/Profittrade review should mention fees, account rules, and contract terms. A scam broker will be unable to operate legally.

Secondly, look for warning signs. The broker should be licensed and regulated by a reliable regulatory body. It should be regulated by a high level. If it doesn’t, it’s a scam. Lastly, it should have a website that lets you easily access your account. Moreover, you should not hesitate to check the contact information. If you find any information that seems suspicious, you should reconsider using the broker.

In summary, Forex trading isn’t easy, but it doesn’t have to be complicated. It’s not as difficult as it seems if you’ve heard about the program. You’ll learn everything about the basics and how to become a professional. But if you’re still unsure about whether this program is right for you, don’t hesitate to contact a school4trading’s website.

The most important thing to remember when it comes to Forex trading is that it’s not easy. While it’s important to have a strong background in trading, there are a number of factors that can affect your success. Having a proper plan is vital in the long run, because you will be trading with real money. And, the platform should be reliable. Otherwise, you’ll end up losing a lot of money.

As we’ve mentioned, Forex is not easy. Investing isn’t something you can do in the comfort of your own home. You need a proven system. There are no free trials, so you’ll have to find a way to do it yourself. This isn’t a scam, and it’s a great way to make money without any help. A Forex system can help you learn the intricacies of the market.

Although the process of learning Forex isn’t an easy one, it’s certainly not impossible. Fortunately, there are many people who are willing to take the time to learn how to trade. But, even the most experienced trader needs to be aware of the risks of the market. While Forex trading isn’t easy, it can be done with the right knowledge. The software’s user-friendly interface is key.

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Daily Financial News

Don’t Count On JPY Correction; Staying Long GBP/JPY

The path of the potential pace of the JPY decline may still be underestimated by markets, which continue trading the JPY long.

While the 10% USDJPY advance from September lows looks impressive from a momentum point of view, it may no thave been driven by Japan’s institutional investors reducing their hedging ratios or Japan’s household sector reestablishing carry trades.

Instead, investors seemed to have been caught on the wrong foot, concerned about a sudden decline of risk appetite or the incoming US administration being focused on trade issues and not on spending. Spending requires funding and indeed the President-elect Trump’s team appears to be focused on funding. Here are a few examples: Reducing corporate taxation may pave the way for US corporates repatriating some of their USD2.6trn accumulated foreign profits. Cutting bank regulation could increase the risk-absorbing capacity within bank balance sheets. Hence, funding conditions – including for the sovereign – might generally ease. De-regulating the oil sector would help the trade balance, slowing the anticipated increase in the US current account deficit. The US current account deficit presently runs at 2.6% of GDP, which is below worrisome levels. Should the incoming government push for early trade restrictions, reaction (including Asian sovereigns reducing their holdings) could increase US funding costs, which runs against the interest of the Trump team.

Instead of counting on risk aversion to stop the JPY depreciation, we expect nominal yield differentials and the Fed moderately hiking rates to unleash capital outflows from Japan.The yield differential argumenthas become more compelling with the BoJ turning into yield curve managers. Via this policy move, rising inflation rates push JPY real rates and yields lower, which will weaken the JPY. Exhibit 12 shows how much Japan’s labor market conditions have tightened. A minor surge in corporate profitability may now be sufficient, pushing Japan wages up and implicity real yields lower.

JPY dynamics are diametrical to last year . Last year, the JGB’s “exhausted”yield curve left the BoJ without a tool to push real yields low enough to adequately address the weakened nominal GDP outlook. JPY remained artificially high at a time when the US opted for sharply lower real yields. USDJPY had to decline, triggering JPY bullish secondround effects via JPY-based financial institutions increasing their FX hedge ratios and Japan’s retail sector cutting its carry trade exposures. Now the opposite seems to be happening. The managed JGB curve suggests rising inflation expectations are driving Japan’s real yield lower. The Fed reluctantly hiking rates may keep risk appetite supported but increase USD hedging costs.Financial institutions reducinghedge ratios and Japan’s household sector piling back into the carry trade could provide secondround JPY weakening effects

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Daily Financial News

Mexico raises interest rates, cites Trump as risk

The head of Mexico’s central bank says U.S. Republican candidate Donald Trump represents a “hurricane” sized threat to Mexico.

Banco de Mexico Gov. Agustin Carstens told the Radio Formula network Friday that a Trump presidency “would be a hurricane and a particularly intense one if he fulfills what he has been saying in his campaign.”

Trump has proposed building a wall along the border and re-negotiating the North American Free Trade Agreement.

Mexico’s central bank raised its prime lending rate by half a percent to 4.75 percent Thursday, citing “nervousness surrounding the possible consequences of the U.S. elections, whose implications for Mexico could be particularly significant.”

Mexico’s peso had lost about 6 percent in value against the dollar since mid-August. It recovered slightly after the rate hike

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