Stock Market drops on uncertain demand outlook amid China lockdowns

Shares of e-commerce company fell in early Asian trade after analysts cut target prices amid guidance for softer second-quarter demand, largely due to the effects of pandemic-related lockdowns in China.’s Hong Kong-listed shares


fell as much as 4.5% to 205.20 Hong Kong dollars (US$26.14) early Wednesday, a day after the company reported a first-quarter earnings beat, while also flagging concerns about demand going forward.

Citi analysts flagged the strict Covid-19 lockdowns in Shanghai as a concern, noting management’s comments about the effects of the pandemic on operations in the second quarter.

Due to’s exposure to higher-tier Chinese cities, warehouse lockdowns and logistics bottlenecks have resulted in a “significant impact” for in the second quarter to date, Citi analysts wrote.

Outlook in the current quarter “remains uncertain,” they added. Citi kept its buy rating, but cut its target price on’s U.S.-traded ADSs to $90 from $97. The ADSs last closed 4.2% higher at $54.67 amid a broad-based rally in technology shares in the U.S.

Daiwa Capital analysts John Choi and Candis Chan said in a research note that various uncertainties are likely to continue to cloud’s growth outlook, noting that order cancellations spiked in April and May.

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The Japanese investment bank cut its target price on’s Hong Kong-listed shares to HK$305 from HK$365. It kept its buy rating, saying should be able to stage a “strong comeback once the macro situation improves.”

Nomura maintained its buy rating and target price of US$77 on the ADSs. It noted management’s guidance for flat-to-slight-growth in second-quarter revenue, but said remains its preferred name in the China e-commerce space.

It added that is likely a long-term beneficiary from the lockdowns given that it was “one of the few e-commerce platforms” able to provide some limited services in the affected regions, while many other platforms suspended services.

Write to Yi Wei Wong at [email protected]

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