It became known that a large China’s online retailer JD.com Inc. had adopted a program to repurchase its own shares. It is planned to invest about a billion US dollars in the implementation of this program. Money for this program will be taken from those free funds that are on the company’s balance sheet.
The price rise of depositary receipts at the preliminary bidding in New York by almost 3% became the consequences of such a decision. It should be noted that the cost of the company’s ADRs has fallen by more than half (or rather by 52.3%) for the year. So, it was a necessary measure to some extent. The reason for such a sharp collapse of the company’s securities was the arrest of one of its top managers, who was charged with sexual harassment. By the way, the accused Liu Qiangdong was released the next day without bail. The businessman did not take risks and immediately returned to China. The representatives of JD.com said the charges were false and absurd. However, the US has not closed the case; the investigation continues, which is a huge negative factor for the ADR value of the Chinese company.
Liu Qiangdong, who is also known under the European name Richard Liu, owns a personal fortune of $ 10.8 billion. This fact makes the 45th businessman one of the richest people in Asia.
JD.com is the second among the Chinese retailers. The first place belongs to Alibaba Group Holding. The retailer has been on the market for 20 years, the company is distinguished by active investments in the sphere of online direct sales (as on Amazon) and the development of its own logistics. JD.com also invests in the luxury retail segment. The decision of the Chinese company to repurchase will provoke volatility, so that the investment in the retailer’s ADRs may be interesting in the short term.
The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade