Why JD.com Shares Zoomed 5% Higher on Friday
What happened
Major Chinese online retailer JD.com (NASDAQ: JD) ended the trading week in style, with its share price surging by nearly 5% on Friday. That gain was due more to developments with an important peer than anything related directly to the company.
So what
JD.com's pop was largely thanks to news about its fellow Chinese e-commerce titan, Alibaba (NYSE: BABA). On Friday morning, Chinese financial regulators fined Alibaba finance unit Ant Group the equivalent of $984 million for violating various commercial laws and operating certain activities without being properly licensed.
That was the culmination of a long, high-profile investigation into Ant Group's conduct, and investors were optimistic that it is at an end. They were also likely relieved at the amount of the fine; although $984 million is a serious penalty, some had expected an even higher figure. At one point, for example, Reuters reported that its sources anticipated an approximately $1.1 billion penalty for Alibaba.
The Alibaba saga has been viewed by many as just one piece of a broader effort by the Chinese government to rein in the power and scope of the nation's tech companies, of which JD.com is one of the more prominent. Now that at least one aspect of the crackdown is complete, cautious optimism is in the air for China's tech sector.
Now what
JD.com hasn't issued any official statement on the Alibaba fine, and it's probably wise for it to remain silent on the matter; the company is subject to the same scrutiny as its peer. Hopefully, no more massive fines are in the offing for any Chinese tech companies that might be attracting unwanted attention from the authorities.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JD.com. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
