Alibaba, Tencent to hit $1t market caps within next few years: experts

By Xie Jun Source:Global Times Published: 2020/1/19 21:33:41

Chinese e-commerce giant Alibaba Group Holding Ltd. makes a strong debut on the main board of the Hong Kong stock exchange on November 26, 2019,  with its share price rising 6.59 percent on the first trading day. Ten partners from around the world attend the listing ceremony. Photo: Xinhua

Experts expect that certain Chinese technology giants, mainly Alibaba and perhaps Tencent, will become members of the $1 trillion market capitalization club within next few years. 

The forecasts come as the companies' market caps soar, but there's still some way to go in terms of catching up with the top of the pyramid - their rivals in the US. 

Last week, Google's owner Alphabet become a trillion-dollar company for the first time. The company hit a market cap of $1 trillion in the final minutes of trading on Thursday night. 

As of Friday, Alphabet was valued at $1.02 trillion as its shares finished at a record high of $1,480.39. 

Besides Alphabet, two other US technology companies have passed the trillion-dollar mark: Microsoft and Apple.

Alibaba had the sixth-highest valuation globally behind US social network giant Facebook as of Friday, when Alibaba was valued at $610 billion, with its shares at $227.43. 

According to Alibaba, its revenue in the quarter ended on September 30, 2019 was 119.02 billion yuan ($16.65 billion), an increase of 40 percent year-over-year.

Another Chinese technology giant, Tencent Group Holdings, which is listed in Hong Kong, was valued at HK$3.81 trillion ($490 billion) on Friday. Its total revenues were 97.24 billion yuan ($13.75 billion), an increase of 21 percent year-on-year, according to the company's third quarter financial report.

Chinese technology experts are optimistic that Alibaba would become the first Chinese mainland-based company to have a market cap of more than $1 trillion, though they said that the well-known Chinese e-commerce giant needs to scale new heights in globalization. 

"Alibaba has made some success in its global layout, such as in Europe, but it is also facing a bottleneck because it doesn't have a product as popular globally as those provided by Google or Apple. That's why it needs to make a breakthrough as soon as possible to push its market cap higher," Zhang Yi, CEO of iiMedia Research and veteran internet observer, told the Global Times on Sunday.  

But he said that Alibaba has a shot. "In the business-to-consumer business, it will be very hard for Alibaba to rival, which has already accumulated ample experience and customer base globally. But Alibaba can gain ground in the business-to-business global trade," Zhang said, adding that Alibaba also has a chance to popularize its mobile payment business beyond the border. 

Liu Dingding, a Beijing-based industry analyst, said that he anticipated that Alibaba's market value would surge above $1 trillion "within the next two to three years," citing the company's rapid revenue growth. 

Liu also told the Global Times that Tencent is expected to hit the $1 trillion market cap within the next few years, although Zhang is more pessimistic about that, saying Tencent didn't do well in globalization. 

Experts also said that it would be a long time for the A-share markets to develop a $1 trillion listed company. 

On the mainland A-share stock market, Industrial and Commercial Bank of China is the most valuable listed company at 2.099 trillion yuan ($306 billion) currently. 

"Most of the A-share capital is still from individual investors, whose investment style is random and unstable compared with institutional investors. This makes it hard for listed companies to have their valuations surge in a steady manner," Zhang said. 

Posted in: COMPANIES

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