What happened
Shares JD.com (JD 2.08%) were pulling back today as Chinese stocks swung lower on several news items. JD also announced new financing for its logistics division, but the sell-off seemed to have more to do with broader news on China.
As of 11:55 a.m. ET on Thursday, the stock was down 6.2%.
A JD.com worker next to a JD Logistics vehicle. Image source: JD.com.
So what
JD said this morning that JD Logistics, its subsidiary that's listed on the Hong Kong exchange, would seek to sell up to $400 million in new shares in a secondary offering. JD also intends to make an investment in the subsidiary, making the total capital raised worth $700 million. The move shows the company is continuing to expand its high-tech logistics division, one of its more promising businesses. But the capital raise is too small to have a significant impact on JD.com stock.
Chinese tech stocks were down across the board today with KraneShares CSI China Internet ETF (NYSEMKT: KWEB) off 4%. Tencent, the owner of the super app WeChat, posted disappointing earnings yesterday, which included its slowest revenue growth in two decades, a sign that tech companies have been significantly wounded by China's regulatory crackdown. The impact of that crackdown, despite signals that it will soon be over, won't be easily undone.
Additionally, the U.S audit regulator, the Public Company Accounting Oversight Board, said in a statement that talk of a deal that would prevent Chinese companies from being delisted from U.S. exchanges was "premature." Fears of delisting have been one of the reasons that Chinese stocks have tumbled over the past year.
Now what
Today's pullback is a reminder that JD's own performance is likely to be overshadowed by market sentiment on China stocks for the foreseeable future. The Chinese tech sector bounced back sharply last week when Vice Premier Liu He called for supporting capital markets, but any shift in policy will take time to play out. Expect the volatility to continue.
