Oct 20, 2016
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China Stock Roundup: JD.com, Wal-Mart Launch New Customer Initiatives, Alibaba Partners with AMD

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Markets endured another volatile week, dominated by major economic releases. The benchmark index declined on Monday, suffering its worst loss in three weeks. The Shanghai Composite rebounded on Tuesday, gaining 1.4% after U.S. dollar denominated B shares listed in Shanghai firmed after Monday's selloff.
The benchmark index ended Wednesday nearly flat following the release of encouraging economic data. The Shanghai Composite closed nearly unchanged once again on Thursday as investors evaluated the series of economic reports released this week.
JD.com JD and Wal-Mart Stores Inc. WMT have launched several new initiatives in order to better serve their customers. Alibaba Group Holding Limited BABA has entered into a partnership with microprocessor and chipset manufacturing giant Advanced Micro Devices, Inc. AMD .
Last Week's Developments
Last Friday, the Shanghai Composite increased 0.1% as investors digested a series of economic reports ahead of the release of the third qua..

Markets endured another volatile week, dominated by major economic releases. The benchmark index declined on Monday, suffering its worst loss in three weeks. The Shanghai Composite rebounded on Tuesday, gaining 1.4% after U.S. dollar denominated B shares listed in Shanghai firmed after Monday's selloff.

The benchmark index ended Wednesday nearly flat following the release of encouraging economic data. The Shanghai Composite closed nearly unchanged once again on Thursday as investors evaluated the series of economic reports released this week.

JD.com JD and Wal-Mart Stores Inc. WMT have launched several new initiatives in order to better serve their customers. Alibaba Group Holding Limited BABA has entered into a partnership with microprocessor and chipset manufacturing giant Advanced Micro Devices, Inc. AMD .

Last Week's Developments

Last Friday, the Shanghai Composite increased 0.1% as investors digested a series of economic reports ahead of the release of the third quarter GDP report. Investors awaited GDP data eagerly in order to gain further insight into the state of the economy. Meanwhile, data released on Thursday indicated that both exports and imports declined in September. However, data on inflation was encouraging with producer prices increasing for the first time in almost five years.

The CSI 300 advanced 0.1%, gaining 1.6% over last week. The benchmark index rose by 2% over the same period, posting its highest weekly gains for two months. Shares in Hong Kong increased, reducing the highest weekly losses in a month. Encouraging data on producer prices helped the Hang Seng gain 0.9%, cutting its weekly loss to 2.6%. The Hang Seng China Enterprises Index moved 1.1% higher, reducing its weekly decline loss to 3.3%.

Markets and the Economy This Week

The benchmark index declined 0.7% on Monday, suffering its worst loss in three weeks. Monday's decline was largely a result of late session losses in U.S. dollar denominated B shares. A fall in the value of the yuan led to these losses, which in turn dampened investor sentiment. The CSI 300 moved 0.8% lower. The Shanghai B share index slumped 6% following concerns over the value of the yuan which sank to a new six-year low versus the dollar.

Meanwhile, shares in Hong Kong hovered near their lowest level in around 45 days. Investors remained tentative ahead of a series of economic reports scheduled for release this week, expecting them to provide clearer indications about the health of China's economy. The Hang Seng moved 0.8% lower while the Hang Seng China Enterprises Index declined 0.6%. All the major sectors suffered declines with services and telecom shares leading the losers.

The Shanghai Composite rebounded on Tuesday, gaining 1.4% after U.S. dollar denominated B shares listed in Shanghai firmed after Monday's selloff. Investors switched their attention to the plethora of economic reports scheduled for release this week. Market watchers opined that the B share market was volatile because it was plagued by poor liquidity. Investors were picking up shares on the cheap since Monday's selloff was fuelled by fear and not based on fundamentals.

Shares in Hong Kong posted their largest increase in 45 days, boosted by the rebound in stocks listed on the mainland's exchanges. The Hang Seng gained 1.6%. The Hang Seng China Enterprises index advanced 1.9%. Another catalyst for an increase in Hong Kong's shares was a spurt in the growth of new loans. China's banks lent 1.22 trillion yuan ($181 billion) in September, exceeding expectations and touching their highest level in three months.

The benchmark index ended Wednesday nearly flat following the release of encouraging economic data. Third quarter GDP increased by 6.7% on a year-over-year basis, consistent with the second quarter's increase. Higher government expenditure and resurgence in the real estate markets helped to negate the impact of sluggish exports. Nearly all the sectors closed nearly unchanged even as infrastructure stocks emerged as the leading gainers.

The CSI 300 gained 0.2%. In contrast, shares on Hong Kong declined after positive GDP data failed to boost flagging investor sentiment. The Hang Seng declined 0.4%. The Hang Seng China Enterprises Index moved 0.8% lower. An early rally in government owned companies petered out by the end of the day due to profit taking. Nearly all the sectors closed in the red with materials and industrial stocks emerging as the leading losers.

The Shanghai Composite closed nearly unchanged once again on Thursday as investors evaluated the series of economic reports released this week. The CSI 300 increased 0.1%. Investors were largely unaffected by the outcome of the final U.S. presidential debate. Market watchers took the view that encouraging third quarter GDP data was mostly a result of expansive government stimulus.

Stocks in Hong Kong moved higher after China increased the retail prices of petroleum. This in turn led to a jump in energy shares. The Hang Seng index increased 0.3% while the Hang Seng China Enterprises Index advanced 0.5%.

Stocks in the News

JD.com and Wal-Mart Stores Inc. have launched several new initiatives in order to better serve their customers. In June, the two companies had entered into a strategic alliance in order to widen their offerings for their customers in China.

As part of these initiatives, an exclusive Sam's Club flagship store will be launched on Zacks Rank #3 (Hold) rated JD.com from Oct 21. This will enable customers in China to access topline products using JD.com's express delivery service. Additionally, a Wal-Mart Global store has been launched on JD.com's international platform JD Worldwide. Also customers will be recovering products within two hours if they order from JD Daojia, the site's new grocery and essentials business.

Alibaba Group Holding Limited has entered into a partnership with microprocessor and chipset manufacturing giant Advanced Micro Devices, Inc. Per the agreement, Advanced Micro Devices will supply Zacks Rank #1 (Strong Buy) rated Alibaba with Radeon Pro GPUs for its cloud services.

While the partnership will enable Alibaba to provide enhanced cloud services to its customers, it will enable Advanced Micro to record growth in its business of data center chips. Thus, this partnership puts both the companies in a win-win situation. (Read: Advanced Micro Partners Alibaba to Power its Data Centers )

Trina Solar Limited TSL announced that it has developed a high-efficiency solar module. The new "Honey Plus" multicrystalline silicon (mc-Si) module contains 120 pieces of P-type mc-Si solar cells (156x78mm2) and has achieved a record aperture efficiency of 19.86%.

The company announced the achievement of an efficiency record of 19.14% on a 1.515m2 aperture area in Apr 2015. The new solar modules have improved the previous efficiency conversion ratio by 3.8%. The stock has a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Baidu, Inc. BIDU has entered into a collaboration with Xilinx, Inc. XLNX in order to increase the deployment volume of accelerated platforms based on Field-Programmable Gate Arrays (FPGAs). Per the agreement, Zacks Rank #3 rated Baidu will utilize Xilinx's FPGAs in order to speed up machine learning applications across their China based data centers.

Such application accelerators are increasingly being used to deal with the buildup of large computational workloads. The FPGAs supplied by Xilinx are power efficient enough to allow the deployment of such accelerators over the entire data centre. Additionally, they also provide performance improvements.

In a separate development, Baidu has launched an artificial intelligence based conversational bot which will assist doctors in information gathering. Also, it will provide responses to patients regarding their medical conditions. This bot will enable time saving during online doctor-patient discussions and offer information to doctors, enabling them to offer recommendations and treatment alternatives.

Huaneng Power International, Inc. HNP has inked an agreement to buy four plants from its parent company China Huaneng Group for 15.11 billion yuan ($2.24 billion). The acquisitions include the complete equity stake in Huaneng Jilin Power Generation and Huaneng Heilongjian Power Generation as well as 80% and 90% equity interests in Huaneng Shandong Power Generation and Huaneng Henan Zhongyuan Gas Turbine Power. This agreement will enable Zacks Rank #3 rated Huaneng Power International to widen the scope of its business and add to its market share.

Performance of Most Actively Traded US-listed Chinese Stocks

The table given below shows the price movements of 10 Chinese companies with the highest three-month average trading volume on U.S. exchanges. Price movements over the last five days and during the last six months have been included.

Ticker

Last 5 Day's Performance

6-Month Performance

BABA

+1.5%

+28%

JD

-0.4%

-8.3%

VIPS

-0.4%

+1.7%

SFUN

-5.8%

-40.1%

MOMO

+1%

+47%

CTRP

+2.5%

-2.4%

VNET

-9.8%

-66.4%

WB

-1.1%

+127.7%

BIDU

+0.2%

-9%

WUBA

-2.4%

-20.4%

Next Week's Outlook:

Stocks have been guided by economic considerations this week. The release of upbeat third quarter GDP data and fluctuations in the value of the yuan have dominated proceedings. Developments related to the reforms of state owned enterprises have also attracted the attention of investors.

The broad consensus is that China's economy is stabilizing and will continue to do so in the near future. Fresh economic releases scheduled for next week, including data on housing as well as business and consumer sentiment is likely to have a major role in determining the direction of stocks in the days ahead.

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ADV MICRO DEV (AMD): Free Stock Analysis Report
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XILINX INC (XLNX): Free Stock Analysis Report
TRINA SOLAR LTD (TSL): Free Stock Analysis Report
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