Alibaba Posts Best Weekly Gain on Shopping Day Outlook

Alibaba Group Holding Ltd. completed the best weekly rally since its U.S. debut amid prospects holiday-season sales will help bolster the market dominance of China’s largest e-commerce operator.

Alibaba’s American depositary receipts have surged 16 percent in the past five days, the biggest weekly rally after their record $25 billion share sale in New York in September. JD.com Inc., China’s second-largest web retailer, has gained just 3.6 percent this week. The Bloomberg China-US Equity Index slipped 0.4 percent on Nov. 7 for a five-day drop of 2 percent.

Alibaba expects its sales during this year’s Nov. 11 Singles’ Day shopping event to surge 40 percent from a year earlier to almost 50 billion yuan ($8.2 billion), driven by increased mobile transactions, according to Bloomberg Intelligence. The Hangzhou-based company, which reported better-than-estimated second quarter profit this week, is also targeting buyers and sellers outside China through platforms such as its Taobao Marketplace and Tmall.com.

“If the company can continue to do well on the mobile side especially, it can continue to grow and strengthen its market dominance,” Henry Guo, a senior analyst at JG Capital Corp. in San Francisco, said by phone yesterday. The Nov. 11 shopping day, a modern Chinese take on Valentine’s Day, “was formerly mainly a domestic market thing, but now the company provides a convenient channel for domestic consumers to shop online and communicate with international brands and manufacturers.”

Taobao Marketplace

Alibaba has 307 million active buyers, the company said when it reported quarterly earnings on Nov. 5, almost half of China’s 632 million Internet user pool. About 29 percent of revenue across the Chinese retail marketplaces comes from mobile. On Nov. 11 last year, Alibaba sales surged 84 percent to a record 35 billion yuan.

While Alibaba tended to promote its T-Mall retail platform in previous years for Singles’ Day, it will focus on pushing the Taobao marketplace along with cross-border transactions this year, according to Cheng Cheng, an analyst at Pacific Crest Securities LLC. “We expect a much bigger Singles’ Day this year versus previous years,” Cheng said by phone from Portland, Oregon.

Alipay, the company’s payment-processing affiliate, has 17.9 million active users overseas in more than 100 countries and is accepted by 2,000 merchants, Sabrina Peng, vice president for Alibaba’s finance arm’s international business, said in October.

Alibaba’s four straight weeks of gains have boosted the ADR’s price to $114.56, a 68 percent jump from the initial public offering on Sept. 18.

JD.com Sales

Beijing-based JD.com rose to $24.74 in New York yesterday, extending to 30 percent its advance since its May IPO. The company last year reported revenue of $1.6 billion during its Singles’ Day promotion period that started Nov. 1.

JD.com is scheduled to report third-quarter results on Nov. 17 before markets open.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., slid 0.2 percent to $39.28 yesterday. Its 1.6 percent decline in the five days was the most in five weeks. The Hang Seng China Enterprises Index slid 2 percent this week to 10,539.33 in Hong Kong, the biggest slump in a month. The Shanghai Composite Index slipped 0.1 percent to 2,418.17, after posting the largest rally since February 2013 the prior week.

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