Finance

JD.com shares inch up after announcing $5 billion share buyback

Published

9 months ago

August 28, 2024

Business Finance News

JD.com set up an Innovative Retail division that houses its grocery business 7Fresh.

Bloomberg | Bloomberg | Getty Images

Hong Kong-listed shares of Chinese online retailer JD.com climbed 1.2% on Wednesday, outperforming the decline on the Hang Seng index after the firm announced a $5 billion buyback late Tuesday.

U.S. listed shares of the firm rose 2.24% on Tuesday after the announcement. Both JD.com’s Hong Kong and U.S. shares have dropped about 20% year to date.

In comparison, Hong Kong’s benchmark Hang Seng index was down about 0.82% Wednesday, but is up about 4% for the year so far.

The announcement is JD.com’s second buyback this year, after announcing a $3 billion buyback in March.

In response to the move, Chelsey Tam, senior equity analyst at Morningstar, said that the decision to announce the share buyback is “not surprising.” She explained, “It is a common theme in China when share prices and growth are low.”

Tam also pointed to Vipshop, another Chinese e-commerce player that has increased its own share buyback program last week.

China’s e-commerce sector has been dogged by a slow domestic economy.

Earlier this month, Alibaba’s second-quarter results missed expectations on both the top and bottom lines. On Monday, Temu-owner Pinduoduo saw its worst ever session after its second-quarter results missed both revenue and earnings per share expectations.

Back in February, Alibaba announced a $25 billion share buyback after it missed revenue targets for the fourth quarter of 2023.

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

1 day ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

1 day ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”