Here’s what China’s Alibaba and Kuaishou say about the economy


Across five major e-commerce platforms’ GMV, Alibaba’s market share fell by 6% in the first quarter versus the fourth, according to Bernstein analysis.

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BEIJING — Alibaba was once the poster child for investing in modern China. Now the e-commerce market that fueled its growth is slowing, while new players eat away at Alibaba’s market share.

That’s reflected in the stocks’ performance since an apparent bottom in sentiment on major Chinese internet names in mid-March.

Pinduoduo shares have more than doubled since then, while Meituan shares have climbed 80%, and JD shares are up more than 50% in Hong Kong. Kuaishou is up by nearly 47%.

Alibaba shares have climbed about 42% in Hong Kong, and 33% in New York. Tencent is up only about 25%.

But except for Kuaishou and Pinduoduo, the stocks are still down for the year so far.

“Our top picks in the sector remain JD, Meituan, Pinduoduo, and Kuaishou,” Bernstein analyst Robin Zhu and a team said in a report this week. “Interest in Alibaba has persisted, chiefly from overseas investors, while feedback on Tencent has become very negative.”

Bernstein expects consumer and regulatory trends to favor stock plays in “real” categories — e-commerce, food delivery and local services — over “virtual” ones — gaming, media and entertainment.

A slowing e-commerce market

Over the weekend, the 6.18 shopping festival spearheaded by JD.com saw total transaction volume rise by 10.3% to 379.3 billion yuan ($56.61 billion). That is a new high in value — but the slowest growth on record, according to Reuters.

Merchants who spoke with Nomura said Covid lockdowns disrupted apparel production, while consumer demand was generally low, according to a Sunday report. High-end product sales fared better than mass-market ones, the report said, citing a merchant.

Alibaba, whose main shopping festival is in November, only said it saw growth in gross merchandise value from last year, without disclosing figures. GMV measures total sales value over a certain period of time.

“Online retail growth is likely to be slower this year than in 2020 and 2021, and its gain in penetration rate may be weaker than the average of 2.6 [percentage points] during 2015-2021,” Fitch said in a report last week.

“This is due to a larger base, deeper integration of online and offline channels … and weaker consumer confidence on concerns of a slowing economy and rising unemployment,” the firm said. Fitch expects online sales of food and household goods to perform better than that of apparel.

In May, online retail sales of goods surged by more than 14% from a year ago, but overall retail sales fell by 6.7% during that time.

Fitch expects China’s retail sales to only grow by low single digits this year, versus 12.5% in 2021. But the firm expects online sales of goods can expand its share of total retail goods to around 29% in 2022, versus 27.4% in 2021 and 27.7% in 2020.

New players grab Alibaba’s market share

In that online shopping market, new companies have emerged as rivals to Alibaba. These include short-video and livestreaming platforms Kuaishou and Douyin, the Chinese version of TikTok also owned by ByteDance.

Across five major…



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Here’s what China’s Alibaba and Kuaishou say about the economy

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