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Today's big stories

JD.com’s results showed that China’s recovery is going to take patience and time
Retail investors are cheerful, even if the pros aren’t – Read Now
The EU and US are turning into lean, green, subsidizing machines in the battle for key industries

Jaded By JD

What’s Going On Here?

JD.com’s meager revenue growth overshadowed last quarter’s juicy profit, spooking investors on Thursday.

What Does This Mean?

Alibaba might be JD.com’s arch-rival, but the firms are both Chinese e-commerce giants – meaning they’re typically birds of a feather where results are concerned. So after Alibaba’s feeble revenue growth last quarter, it didn’t come out of left field when JD reported that overall revenue was disappointing and direct sales from its online platforms grew just 1%. In the firm’s defense, the cards were stacked against it: vast tracts of China remained under lockdown during the December quarter, keeping a lid on shopping. JD still managed to overshoot profit estimates, though, thanks to a raft of cost cuts. But that wasn’t enough to placate hard-to-please investors. They dumped the stock despite a tantalizing $1 billion dividend announcement.

Why Should I Care?

The bigger picture: It's going to take patience and time.
JD’s performance might improve as China's economy does, but let’s get one thing straight: the country’s not going to take off with one little wave of the government’s lockdown-lifting wand. Chinese imports and exports actually fell in January and February, and cautious spending brought last month’s inflation down to the lowest level in a year. Now JD’s betting that the rebound will be gradual, and it’s counting on consumers’ confidence (and incomes) dialing up over time.

Zooming out: China’s e-comm royal rumble.
Competition in the Chinese e-commerce market is fierce right now, with newcomers like Pinduoduo shaking the thrones of well-fed reigning champs. But JD’s been brushing off distractions to focus on the fight, saying goodbye to its Thai and Indonesian websites in favor of closer-to-home programs like a $1.4 billion discount campaign. That’s not a guaranteed recipe for success either, though: margins could get dangerously thin if the firm’s not careful, and JD’s rep as a marketplace for higher-end goods might suffer too.

You might also like: Five spicy stocks for China’s reopening.

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Analyst Take

You’re Optimistic; The Pros Aren’t. Don’t Let That Stop You.

By Paul Allison, Analyst

They’re certainly a gloomy lot, those professional investors.

More than two-thirds of fund managers recently said the market’s strong performance since October has been nothing more than a bear market rally.

And so they’ve sold their stocks, and currently are up to their eyeballs in cash.

But that doesn’t mean you have to follow suit. In fact, you might know better than the pros.

That’s today’s Insight: why you don’t need to be glum just because the pros are.

Read or listen to the Insight here

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