Nomura Sees Healthy Fundamentals, Less Investor Concerns on Regulation for CN Internet Sector

　　Jialong Shi, Nomura's Head of China Internet and New Media Research, said the fundamentals of China's internet industry are healthy, and the industry's earnings growth is resilient, with many companies reporting better-than-expected earnings. In particular, companies in the sector have high cash reserves. According to the broker's calculations, the latest cash reserves as a percentage of market capitalisation is nearly one-third. As a result, more and more Chinese internet companies are rewarding their shareholders with aggressive share buybacks and dividends, and some are doing both.

　　In Shi's view, one of the issues to watch in 2H24 is competition, particularly in the e-commerce space, where BABA-SW (09988.HK) -0.550 (-0.721%) Short selling $171.55M; Ratio 15.103% is expected to continue giving out subsidies for some time as it seeks to regain lost customers and increase the frequency of customer spending.

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　　Another topic of concern is AI. He noted that no internet company has launched a set of super AI applications yet, and if one does in 2H, it will help stimulate the market.

　　Shi mentioned that China's regulation of the internet industry is significantly less stringent than in the past few years, and the country also supports and encourages the industry's development, which is believed to be due to the supportive role of internet enterprises in promoting technological development and stabilising employment. Investors' concerns about regulation have subsided.

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-07-18 12:25.)

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