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Shares of JD.com jumped after the e-commerce major said it would spin off its property and industrial units and list them in Hong Kong, joining Alibaba Group Holding in unveiling the latest restructuring of China's technology giants.
JD.com surged as much as 8.1 per cent before paring gains to 6.9 per cent to HK$174.60 at the lunch break on Friday, mirroring a 7.8 per cent gain in its American depositary receipts on Nasdaq overnight.
Beijing-based JD.com proposed spinning off its subsidiaries JD Property and JD Industrials and separately list them on the Hong Kong stock exchange, according to two separate filings on Thursday night.
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After the spin-offs, JD.com will continue to hold more than 50 per cent stake in the two units.
A worker sorts packages for delivery at a JD.com warehouse in Beijing. Photo: AFP alt=A worker sorts packages for delivery at a JD.com warehouse in Beijing. Photo: AFP>
The move came days after rival Alibaba, the largest technology conglomerate in China, announced that it would overhaul its US$257 billion empire and split them into six units, its biggest restructuring since its founding two decades ago.
Alibaba will reorganise its businesses into six independently run entities: Cloud Intelligence Group, e-commerce under Taobao-Tmall, smart logistics operations under Cainiao, Local Services Group, Global Digital Business Group, and Digital Media and Entertainment Group, according to a letter to employees on Tuesday. Alibaba owns the South China Morning Post.
The move by the two tech giants has been welcomed by the market, which expects the corporate overhauls to add to the market rally seen in the past three weeks.
"It's positive as investors regard the measures as beneficial for enhancing their efficiency and releasing the potential [of the subsidiaries]," said Kenny Wen, head of investment strategy at KGI Asia.
Wen said that while such measures are no indication of more Chinese tech companies undertaking similar measures in the short term, he did not rule out the possibility of tech companies gradually following suit after seeing the market's reaction.
China's crackdown on the tech industry had hurt the shares of many companies. For example, JD.com's Hong Kong shares are still down 21 per cent this year, after falling for two consecutive years.
Willie Tan, CEO of Luen Thai Enterprises and a robotic arm, hit a gong to mark the debut of JD Logistics on the Hong Kong stock exchange, at JD.com's headquarters in Beijing, on May 28, 2021. Photo: Bloomberg alt=Willie Tan, CEO of Luen Thai Enterprises and a robotic arm, hit a gong to mark the debut of JD Logistics on the Hong Kong stock exchange, at JD.com's headquarters in Beijing, on May 28, 2021. Photo: Bloomberg>