Tencent, Alibaba, JD.com, Lenovo– use warrants to leverage on stock moves leading up to this week’s earnings

▪️ This week, Chinese tech companies Alibaba Group, Tencent Holdings, JD.com and Lenovo will provide a snapshot of China’s economy and consumer sentiment, as another sombre earnings season is expected in the region.

▪️ Investors who foresee volatility in their share prices leading up and on the back of this week’s earnings may wish to consider using warrants to leverage on potential share price moves, priced at a fraction of their respective share prices of between SGD 0.018 to SGD 0.096 (as of yesterday’s close). The warrants will move approximately 2 times to 10 times more than the underlying shares.

▪️ On the back of China’s slowing economy, Chinese technology companies could continue to see lower than expected earnings. Tencent’s advertising, fintech and business services operations are sensitive to deteriorating economic growth, while Alibaba and JD.com are spending more on online perks and discounts to drive sales growth. China’s consumer prices had risen more than expected in July, offering hope of a recovery in domestic demand. (Bloomberg)

▪️ Typically, the companies’ share prices get a boost in the short-term if their actual earnings surpass expectations, whilst the share prices may be dragged lower in the short-term if earnings are below expectations. Here are earnings expectations for each of the Chinese tech companies, according to Bloomberg Intelligence: