August Recap: Squabbles Lead to More Tariffs; 9F Debuts Amid High Volatility
August was marked by a series of back-and-forths on tariffs between Washington and Beijing. The situation is at a standstill: more tariffs are taking effect, though the dialogue between the world's two largest economies continues.
Markets were highly volatile this month, sensitive to the trade tensions as much as to the companies’ financial statements. Here are some turns worth mentioning.
Trade woes continued to weigh on the markets this month, though hopes of ongoing talks led to upswings. August was a volatile month, marked by 11 daily turns of at least 1 percent by the S&P 500, as the Wall Street Journal reported.
The U.S. President showed no signs of tiring from pressuring China and threatened early in August yet another tariff hike. In response, China's central bank let the nation's currency fall to beyond 7 to the U.S. dollar – yuan’s lowest since 2008. Donald Trump called Beijing a foreign currency manipulator and fumed at the U.S. Federal Reserve Bank for inaction, but the devaluation was an expected retort, as CW columnist Mark Melnicoe wrote.
Later, on Aug. 23, China announced tariffs on the remaining U.S. imports. Donald Trump responded immediately, raising his tariffs higher.
Insofar, tariff changes on Chinese imports are set to go into effect in three stages. Existing tariffs on $250 billion of taxed goods will be raised to 30 percent from 25 on Oct. 1. New tariffs of 15 percent covering the remaining $300 billion worth of Chinese imports will launch on Sept. 1 and Dec. 15.
On Sunday, new taxes took effect on consumer products including smartwatches, clothes, diapers, shoes and flat screen TVs. In December, cell phones, laptops and toys will be hit, as reported by Reuters.
China’s additional tariffs are also set for Sep. 1 and Dec. 15. U.S. crude oil will be taxed 5 percent for the first time, tariffs on soybeans will be raised to 30 percent from 25, meats will get a 10 percent hike. U.S. vehicles and auto parts will be hit with 25 and 5 percent tariffs, respectively, according to Reuters.
E-commerce Heats Up
Pinduoduo Inc. (Nasdaq: PDD) has been on a wild ride. This month, the discounter platform was reported to have surpassed one of the Big Three internet giants, Baidu Inc. (Nasdaq: BIDU), on the list of China’s most valuable internet companies.
PDD posted narrowed losses and revenue of $1.1 billion for the second quarter, which spiked investors’ interest in the scandal-ridden online retailer. In addition, a number of analysts raised their price targets on Pinduoduo. The company’s stock peaked at $33.88 per ADS this week, that’s 78 percent above where it was at IPO a year ago.
Other e-commerce giants also fared well. Alibaba Group Holding Ltd. (NYSE: BABA) beat analysts’ expectations with $16.3 billion in revenue and $3.02 million in profits. JD.com Inc. (Nasdaq: JD) hit $22 billion in revenue and $90.1 million in income, thanks to its anniversary sales event.
Alibaba, meanwhile, has postponed its Hong Kong listing amid ongoing protests in the city. The company is expected to raise between $10 billion and $15 billion in its secondary listing, which is now anticipated in October.
Other industries saw mixed results. Electric carmaker Nio Inc. (NYSE: NIO) posted low deliveries for July and staff cuts that sent its stock trading mostly below $3.15 per share on average this month. Niu Technologies Inc. (Nasdaq: NIU), which makes e-scooters, reported a strong second quarter, but its stock was negatively affected nevertheless. And while new-energy vehicles in China have been affected less by the overall auto market slump in China, the cuts to EV subsidies by nearly half in June have swept up that sector as well.
Some players in the financial industry seem to have been recovering from the clampdown on lending in China. PPDAI Group Inc. (NYSE: PPDF), along with LexinFintech Holdings Ltd. (Nasdaq: LX), posted strong revenue for the second quarter. 360 Finance Inc. (Nasdaq: QFIN) also had strong results, though news of its CEO resignation and the investigation into the company sent its stock lower. Others, like Fanhua Inc. (Nasdaq: FANH) were still suffering from instability in the industry.
Up Fintech Holding Inc. (Nasdaq: TIGR) reported narrowed losses and strong revenue, though its stock has been trading at nearly half the price of its IPO offering. And while investors in Up Fintech who may have suffered from its stock drop were invited to take part in investigations into the company by a number of law firms, rival broker Futu Holdings Ltd. (Nasdaq: FHL) has been trading at just $1 to $2 below its IPO price of $12 per share.
Futu posted 40 percent revenue growth and a 129-percent jump in income, as well as ongoing expansion across a number of projects. Among them is the development of its trading app for the U.S. market, called MooMoo. Both brokers became U.S.-listed earlier this year.
9F Hits the Jackpot
9F Inc. (Nasdaq: JFU) was the only Chinese company to complete its initial public offering on Wall Street in August. A disappointing statistic, considering July’s three Chinese IPOs, including the biggest one this year by DouYu International Holdings Ltd. (Nasdaq: DOYU).
(Image: Thomson Reuters Eikon)
This month, DouYu reported revenue that has more than doubled for the second quarter, as well as a net income in contrast to last year’s losses, but its stock failed to change course. Shares in the company have been trading below its IPO price of $11.50 since its debut.
9F, meanwhile, debuted on Aug. 15, raising $84.6 million. The company, which provides financing and wealth management services, sold 8.9 million American depositary shares at $9.50 each. Upon liftoff, shares in 9F soared 45 percent to $13.73 apiece, then settled at $9.58 at close.
Yanjun Lin, 9F's chief financial officer, said in an interview to CW reporter Belinda Zhou that he was surprised to see the positive trend amid the overall market volatility. And 9F’s stock has fared well. On Friday, JFU closed at $10.86 per share after fluctuating above its IPO price since debut.
(Image: Thomson Reuters Eikon)
Another Chinese company, WiMi Hologram Cloud Inc., was expected to become U.S.-listed in early August but the plan fell through. The Beijing-based AR services provider anticipated to raise up to $38 million for 4 million of its ADSs. Its IPO was scheduled for the first week of the month but has been postponed without a definite timeframe.
Markets will be closed on Monday for the Labor Day holiday.