① Analysts at JPMorgan believe that the direct impact of U.S. tariffs on Chinese Internet companies (excluding cross-border e-commerce) is limited, and the effect on online consumption may be less than 0.5%; ② A report by Jinrui Fund pointed out that the share of revenue from Chinese Internet companies in the U.S. market is less than 2%, mainly serving China's vast consumer market of 1.4 billion people. ③ JPMorgan expects PDD Holdings to be most affected by the tariffs, while Tencent and NetEase are more defensive.
On April 17, Financial Associated Press reported (Editor: Liu Rui) that amidst U.S. President Trump's chaotic imposition of "tariff sticks" disrupting the global financial market, the stock prices of Chinese concept Internet companies listed in Hong Kong and the U.S. have also experienced significant fluctuations.
However, analysts at JPMorgan stated in a recent report that the impact of U.S. tariffs on Chinese Internet companies is not direct, and the effect on online consumption is even negligible.
At the same time, the U.S. fund company KraneShares (Jinrui Fund) also pointed out that revenue from the U.S. market accounts for less than 2% of Chinese Internet companies, and the actual impact of tariffs is limited.
JPMorgan: The direct impact of tariffs on Chinese concepts is limited.
Analysts at JPMorgan stated that they believe the U.S. equivalent tariffs have no direct impact on the revenues of Chinese Internet companies (excluding cross-border e-commerce), and the main effect may be indirect. For example, as high tariffs in the U.S. could weaken China's exports to the U.S., it may affect consumption, which in turn weakens advertising demand.
JPMorgan expects that the so-called "equivalent tariffs" from the U.S. will have a minimal impact on Chinese online consumption, possibly less than 0.5%.
Among China's major Internet technology companies, JPMorgan believes that the stock most affected by Trump's tariffs will be PDD Holdings, as its U.S. business accounts for more than 10% of total revenue, contributing a single-digit percentage to profits.
Relatively speaking, stocks that are more defensive during tariff impacts will be $TENCENT (00700.HK)$ and $NetEase (NTES.US)$ because JPMorgan believes that during tariff impacts, the digital entertainment (especially Online Games) businesses of these two companies are counter-cyclical, and the revenue contribution from the USA market is also relatively small.
Among the Chinese Internet companies listed in Hong Kong and the USA, JPMorgan's top pick is $Alibaba (BABA.US)$ 、 $Trip.com (TCOM.US)$ 、 $Tencent Music (TME.US)$ and $TENCENT (00700.HK)$ 。
The proportion of revenue from American markets for Chinese Internet companies is extremely low.
The USA Fund Company KraneShares (Jinrui Fund) recently released a report stating that $KraneShares CSI China Internet ETF (KWEB.US)$ Representatives from China's Internet Industry have maintained a very low revenue exposure to the USA (less than 2%), therefore, these companies can essentially remain unaffected by direct trade pressures from the USA.
Such a low proportion of revenue from the USA reflects the focus of Chinese Internet giants on the domestic market.
Jinrui Fund pointed out that it includes TENCENT, Alibaba, $JD.com (JD.US)$ and $MEITUAN-W (03690.HK)$ Chinese major Internet giants, including those companies, have business models primarily centered around serving China's 1.4 billion population and a massive consumer market with an annual output value of 2 trillion USD. Their services (covering e-commerce, Digital Payment, Cloud Computing, Online Games, and Social Media) are mainly aimed at users within China's digital ecosystem.
Krane Fund also mentioned that Chinese Internet companies' limited reliance on their US business is not only reflected in revenue but also in the supply chain. Unlike hardware manufacturers that may heavily rely on American components, Chinese Internet companies have developed a self-sufficient technology stack, and this technological independence further protects them from potential impacts of supply chain disruptions.
Editor/rice
