Weekly Investment Ideas 25 October 2021

9 MONTH FIXED COUPON NOTE ON CHINA TECH 9888 HK, 9618 HK


Beneficiaries of China Big Tech Regulation


Baidu ( 9888 HK ): Baidu is China’s top search engine with over 75% of the search market based on pageviews. Last week, Bloomberg reported The Ministry of Industry and Information Technology is debating rules to force Tencent and ByteDance, and its Chinese TikTok equivalent Douyin, to make their content available to search engines like Baidu. For example, articles on WeChat public accounts currently only appear on the app’s native search function or on the smaller engine Sogou, both of which are controlled by Tencent. If the new rules are implemented, advertising revenue from “walled gardens” that the Beijing aims to open up could be diverted to Baidu.


JD.com ( 9618 HK ): JD is China’s no. 2 e-commerce player and counts Tencent and Walmart amongst its strategic investors. In April, rival Alibaba was fined $2.8b for violating anti-monopoly regulations regarding the practice of "pick one of two," in which Alibaba would force brands into exclusivity contracts for access to its platform. This will allow JD to gain access to such brands. We expect continuous market share gain for JD in 3Q21 with revenue growth of 23% yoy (especially in the 3C and FMCG categories), compared to slower industry online retail growth at only 11%/5% yoy in Jul/Aug 21. JD.com is a UOBKH Alpha Pick.



WEEKLY INVESTMENT IDEAS - 20211101 - DIS NFLX SPOT FCN
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