Investors wary of the political risks from China should avoid all securities from this country. Still, JD.com,
a high-end online retailer, is a promising company. Alibaba (BABA) and Didi (DIDI) are not.
On April 7, JD.com named Lei Xu as the new CEO. The fresh leadership puts an end to the controversial
Richard Liu, the previous CEO. Still, Liu will remain the chairman of the board. He will guide the company
on long-term strategies.
On May 4, JD will consider announcing a special dividend. The payout suggests that the company is
confident in its growth prospects ahead. JD also said it would raise its buyback to $3 billion, up from $2
billion, late last year. After JD stock fell, the company would reward shareholders sooner by buying back
more shares. The dividend will only temporarily prop the stock. Once paid, investors may sell shares and
look for other opportunities.
Investors are not looking at Alibaba favorably. The company continues to face restrictions from Chinese
regulators at random times. After founder Jack Ma criticized the Chinese government a few years ago,
the stock lost its glow. Expect BABA stock to underperform.
Didi’s uncertainties on a Hong Kong listing will hurt the stock. In addition, the SEC will pressure the firm
to de-list from the U.S. exchange. Avoid DIDI stock for those reasons.
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