JD.com shares are poised to rebound following Walmart’s decision to sell a stake in the company, as the move doesn’t affect the e-commerce firm’s positive fundamentals, according to JPMorgan Chase & Co.
The Chinese company’s Hong Kong-listed stock jumped as much as 3% on Thursday, after sliding 8.7% the previous day on news the US retailer was offloading all of its stake. The rebound helped the Hang Seng Tech Index gain as much as 1.6%.
While Walmart’s decision is clearly a short-term negative, JD.com doesn’t currently benefit much from its relationship with the retailer for its core e-commerce business, JPMorgan analysts led by Andre Chang wrote in a note Thursday.
Low valuations and investor positioning provide “a good setting for share price outperformance”, especially as JD.com’s trade-in policy for home appliances should improve revenue growth in the second half, the analysts said.
JPMorgan had upgraded the Chinese tech firm to overweight just last Friday. Investors responded to that upgrade by saying they prefer Alibaba Group Holdings and PDD Holdings shares for longer-term investment, the analysts said.
