China’s tech giants fight back as slowdown takes toll

Opening Bell 🔔 is Tech in Asia’s free newsletter, which brings you the biggest news and latest trends around publicly listed Asian tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](. Hello {NAME} Strike 1: Alibaba (BABA, NYSE) last month posted its [slowest]( quarterly revenue growth since going public in 2014. Strike 2: JD.com (JD, NDAQ) recently reported its [weakest]( revenue growth in six quarters. Strike 3: Pinduoduo‘s (PDD, NDAQ) fourth quarter revenue fell well below analysts’ estimates after reporting a [meager]( 3% year-over-year rise last week. And just like that, China’s ecommerce titans were bowled out in a single sweep by the nation’s [slowing economy](. Headwinds from Covid-19 outbreaks, an uncertain geopolitical climate, rising fuel prices, and a downturn in the country's property sector has left consumers cutting back on discretionary expenses. Of course, consumer discretionary spending is not limited to just ecommerce, so that can only mean it is not the only sector feeling the effects of China’s economic slowdown. Tencent Holdings (0700, HKG) can attest to that. The social media and gaming giant’s revenue [grew 8%]( in the fourth quarter - its slowest pace since going public in 2004. Image credit: Timmy Loen The world's second-largest economy is reeling, and the government has perched up and taken notice. Vice Premier Liu He’s [recent comments]( which indicated that Beijing would roll out support for the economy and stabilize the markets, ignited a rally in China’s battered stocks. Shares of Alibaba, JD.com, and Pinduoduo were among the many Chinese stocks to benefit from a switch in regulatory tone from President Xi Jinping’s administration as they finished the last fortnight up around 30%, 25% and 38%, respectively. It is not only China’s government looking to revitalize investor sentiment around its tech companies. Alibaba and Xiaomi Corp (1810, HKG) have turned to share buybacks to reward its shareholders after a horrendous performance in their share prices over the last year. Xiaomi will repurchase shares of up to [HK$10 billion (US$1.29 billion)]( after its shares lost roughly a third of their value over the past six months. Meanwhile, Alibaba, whose shares plunged by over 50% in value in the last year, [upsized]( its buyback program from US$15 billion to US$25 billion. -- Shravanth 4 STOCKS TO WATCH Hot stocks, earnings reports, restructuring, activist investor pressure, and more. We also feature the stocks that are likely to make big moves this week. Image credit: Timmy Leon 🇮🇩 Bukalapak (BUKA, IDX) While much of the spotlight has fallen on its investments in banking and retail, Bukalapak is preparing for a serious venture into [gaming](. The Indonesian ecommerce behemoth has been on an M&A spree since its US$1.5 billion IPO last year, acquiring Itemku, an online marketplace for game-related digital products, and investing in Yield Guild Games Southeast Asia, a blockchain gaming startup. In the surest sign yet of its foray into gaming, Bukalapak posted a job advertisement for a “CEO of Gaming” on LinkedIn. 🇨🇳 Weibo Corp. (WB, NDAQ) The social media platform is the latest overseas-listed Chinese company to be targeted by the US government’s intensifying crackdown. Last week, Weibo was added to the US securities regulator's list of companies facing the risk of being delisted. The company responded by stating that it is currently evaluating its [options](. Washington has demanded complete access to the books of US-listed companies. But Beijing, citing national security concerns, bars the foreign inspection of working papers from local accounting firms. 🇹🇼 Foxconn Technology (2354, TPE) The assembler of Apple’s (AAPl, NDAQ) iPhone is [venturing into]( the electric-vehicle market. After years of working for some of the world’s greatest electronics companies, Foxconn is now breaking out of its manufacturing shell to build its own consumer-facing brand. It plans to begin accepting pre-orders for its Model C SUV - priced at under US$36,000 - on October 18. The cars will be delivered in the first half of 2023. 🇰🇷 LG Energy Solutions (373220, KRX) This battery supplier of EV markers Tesla (TSLA, NDAQ) and Lucid Motors (LCID, NDAQ) plans to [invest]( 1.7 trillion Korean won (US$1.4 billion) to build a battery factory in Arizona by 2024 to meet demand from "prominent startups" and other customers in North America. This will be its first factory in North America to make cylindrical cells, a type of battery that has been used in Tesla and Lucid vehicles, according to LG Energy Solutions. Construction will begin in the second quarter of 2022, with mass production to start in 2024 with production capacity of 11 gigawatt hours. 3 MARKET WHISPERS A lot more reliable than whispers, we highlight engaging source-based reporting from reputable news outlets around the globe. Photo credit: Timmy Loen 1️⃣ Bringing out the ax Didi Freight, the intracity logistics service of Didi Global (DIDI, NYSE), could slash its workforce [in half]( and may limit its operations to just one or two cities. The job cuts, which began in November 2021, come as other Chinese tech powerhouses like Alibaba, Baidu (BIDU, NDAQ), and Tencent are also laying off staff. 2️⃣ Floating a new venture VE Commercial Vehicle (VECV), a joint venture between Eicher Motors (EICH, NSE) and Volvo Group (VOLV.B, STO), is considering carving out a [separate unit]( to participate in India’s growing EV segment. VECV would be open to private equity funding. If VECV participates in the government's tender for 5,000 electric buses, the new entity would need funds to acquire a fleet of buses and operate them as mandated. 3️⃣ Deep-pocketed competition incoming After a shaky start as a public company, Grab (GRAB, NDAQ) has made a mild resurgence in recent weeks. Its shares are currently trading well above its 52-week low. Rival super app GoTo Group is also enjoying the spotlight, courtesy of an upcoming IPO. However, good times don't last forever: Viva Republica, which operates mobile financial app Toss, is set to raise up to [US$1 billion]( in the second quarter this year. The South Korea-based firm is pushing into five countries - Indonesia, Malaysia, Thailand, the Philippines and India - where it will go head to head with Grab and GoTo. 2 EYE-POPPING FACTS Tech in Asia scours the internet to bring you the head-turning numbers from the world of business. Photo credit: Oliver King - [60%]( - Shares of Chinese telecommunications company ZTE Corp (0763, HKG) climbed by as much as over 60% of its market value after a US court ruled to end a five-year probation stemming from Iran sanctions violation case. The probation was part of the penalties from a 2017 settlement between ZTE and US prosecutors, in which the telco firm agreed to pay US$892 million in fines and plead guilty to breaching US-imposed sanctions on Iran. - [7.5]( – This was the number of times that the share repurchase of Tata Consultancy Services (TCS, NSE) - India's largest software exporter - was oversubscribed. The strong interest came as the offer price was pegged at 4,500 rupees, which was roughly 20% above the current stock price. Investors tendered about 300 million shares in the US$2.36 billion buyback, which started on March 9, against the company's offer of 40 million shares. THE 1 YOU DIDN'T SEE COMING We spotlight the unusual, not-your-everyday kind of story that has got everyone talking and social media buzzing over the past week. Image credit: Timmy Loen Return on … Character? Yes, you read that right! A new exchange-traded fund in the US is banking on our fascination with strong personalities and charismatic CEOs to drive returns for its investors. The Return on Character ETF (ROCI, NYSE) seeks capital appreciation by targeting the stocks of businesses led by “high character” bosses. The actively managed strategy uses a model based on “integrity, responsibility, forgiveness, and compassion,” according to a [statement]( from Dan Cooper, founder and CEO of ROC Investments LLC. Notable names such as Apple’s Tim Cook, Microsoft’s (MSFT, NDAQ) Satya Nadella, and Amazon’s (AMZN, NDAQ) Andy Jassy made the cut while Meta Platforms’ (FB, NDAQ) Mark Zuckerberg and Tesla’s Elon Musk missed out. Despite failing to make the grade this new fund, Musk is unlikely to have FOMO. The world’s richest man was seen busting out his [latest dance moves]( at Tesla’s new Gigafactory in Germany. That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](. Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894