Why has Singles' Day's $38.3 billion shopping record failed to boost stocks?
Published: Nov 12, 2019 05:56 PM

Statues outside the building of the Shenzhen Stock Exchange File photo: IC

This year's Singles' Day turned out to be an amalgamation of fire and ice in the world's top internet market, with a chilly fall in the stock market contrasting with record-smashing online sales.

Why did the e-commerce fervor, arguably an indication of Chinese consumers' rising spending power, fail to create positive ripple effects in the stock market? 

Online retailers set new sales records on Singles' Day, also referred to as Double 11, with transactions on Alibaba's Tmall totaling 268.4 billion yuan ($38.3 billion), well above the full-day figure of 213.5 billion yuan in the prior year. Orders made on also hit a new high of more than 200 billion yuan. 

Inversely, the benchmark Shanghai Composite Index shed 1.83 percent to finish narrowly above 2,900 points on Monday, with over 90 percent of the 3,700-plus listings ending lower.  

The stock losses across the board might seem unfathomable. After all, few wanted the super discounts on Double 11 to spread to the stock market.

To start with, new policy announcements after the closing bell on Friday, notably the easing of refinancing rules for firms listed on the ChiNext board, will supposedly reduce barriers for funds to be raised through the equity market in hopes of shoring up the real economy. 

Nonetheless, these appear to have dented investor sentiment in the short run, as easier access to capital for companies actually puts the market under greater pressure amid sluggish liquidity and trading activity. Failing to rise above the key resistance level of 3,000 points after multiple attempts has already been a psychological setback for investors.   

Additionally, the consumer price index for October was on Saturday revealed to have recorded a new, more than seven-year high, fueled by soaring pork prices. The consumer inflation, expected to continue upward in the months to come, poses a dilemma for monetary policymaking, dampening easing hopes.

Among other factors considered to be contributing to a risk-off environment is US President Donald Trump's Friday denial of agreeing to rollbacks of US tariffs on Chinese goods, which has sparked fresh doubts about the signing of the Phase One trade deal. Additionally, traders were jittery amid escalating unrest in Hong Kong, with the Hang Seng Index logging a loss of over 700 points on Monday.

Hence, the stock market opening to a poor start this week should come as no surprise.

E-commerce and courier services stocks were also badly battered on Double 11. Stocks normally rise based on expectations for future thrills, and the arrival of Singles' Day suggested it was time to liquidate rather than "shop." Therefore, shopping-related stocks had risen well ahead of the day. 

Hopefully, a partial recovery in the stock market on Tuesday could help in soothing the pain for investors whose purses might have suffered a double whammy on Double 11.

The author is a reporter with the Global Times.