JD.com's 2026 Outlook Likely Remains Challenging — Market Talk

JD.com's losses from its food-delivery segment will likely narrow from 4Q, supported by efforts to drive the business's efficiency, DBS analysts say in a note. The business should be able to utilize subsidies better and improve operating leverage, even as losses remain sizable, they write. Early-stage monetization of food-delivery services is also growing through commissions and ads, helping JD.com narrow losses in new businesses despite increased investments for overseas expansion, they add. DBS cuts its 2025 earnings estimate by 11% to reflect softer 4Q retail profitability. It is also more cautious about the Chinese e-commerce company's trajectory in 2026. The bank reiterates the stock's buy rating, citing expectations of continued narrowing of new-business losses and meaningful capital returns through dividends and buybacks. (jiahui.huang@wsj.com; @ivy_jiahuihuang)

By Jack Denton

Alibaba and other Chinese names fell in Monday trading, trailing U.S. stocks even as the wider market exhibited a lackluster performance to start the final week of the year.

Investors may be considering economic weakness in China — and the extent to which the Chinese government will do something about it.

Alibaba's American Depositary Receipts — or ADRs, essentially its U.S.-listed stock — fell 3.2%, with JD.com down 1.4% and Temu parent PDD also 1.3% lower. The S&P 500 was off 0.5% by comparison.

Monday was a poor start to the week for the market in Hong Kong, where Alibaba and many Chinese tech peers are listed, with the Hang Seng Index dropping 0.7%.

One factor pushing down Hong Kong stocks — and likely Alibaba, in particular — was continued worries about of China's economy.

Chinese industrial companies experienced a profit decline of 13.1% in November, accelerating from a 5.5% fall in the prior month, according to economic data revealed over the weekend.

On Sunday, China's Ministry of Finance announced that the government would increase spending to boost consumer demand — a promise of fiscal stimulus to come.

Alibaba, with a business primarily still in online retail despite its move into artificial intelligence (AI), is highly sensitive to fluctuations in China's economy, and especially consumer sentiment.

Declines in Alibaba stock on Monday may indicate that investors do not see Chinese fiscal stimulus plans as being sufficient enough to offset the slowdown in the world's second-largest economy.

More broadly, Alibaba's ADRs have had a great year, gaining 75% to the highest levels since 2021 amid a surge on the back of AI optimism.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

China's extension of a trade-in program is likely to provide limited benefit to China's top home appliances retailer JD.com, according to Citi analysts in a research note. Beijing recently said that it would introduce proactive fiscal policy to boost consumption, including arranging funds to support an extension of the ongoing government-backed trade-in program for consumer goods, the analysts point out. Investors are still awaiting details from Beijing. "While an extension of trade-in program support could be positive, it is likely to have limited benefit to JD.com given a high base for home appliances in 1H 2026, "the analysts say. Overall funding could also be applied to broader product categories rather than focusing on home appliances and electronics, they note. (tracy.qu@wsj.com)

By Reshma Kapadia

Whether China's economy and stock market score another surprisingly strong year in 2026 depends in large part on how well things go in the U.S.

In 2025, the MSCI China exchange-traded fund has soared 29%, compared with 18% for the S&P 500. The Chinese economy rode out U.S. tariffs more easily than expected, and Beijing emerged from trade negotiations showing it has a strong hand to play against Washington.

And fund managers see a decent set-up for Chinese stocks next year. The enthusiasm sparked by the DeepSeek artificial-intelligence model continues to draw investors to China's "new economy:" AI, biotech, robotics, semiconductors, and clean tech, partly because they believe that becoming more self-reliant in tech remains a priority for Chinese leader Xi Jinping.

The October détente between Xi and President Donald Trump, and plans for them to meet several times in 2026, have raised hope that the countries can avoid a major worsening of friction while the leaders focus on domestic challenges.

China has an ample supply of problems. Beyond the dynamism in the "new economy," economists are focused on a struggling "old economy" that still accounts for 80% of gross domestic product. Property prices are still declining four years into a real estate slump, and investment and sales have fallen by double digits from a year earlier in recent months.

Retail sales grew 1.3% in November 1.3%, the slowest pace since 2022. A weak job market and a loss of household wealth resulting from the slide in property prices have made people reluctant to tap the additional $11 trillion in savings built up in recent years.

Investment, the lifeblood of economic growth, logged the worst decline in decades in recent months. Spending on fixed assets fell by 2.6% compared with a year earlier from January through November, marking the worst contraction in decades.

Companies aren't spending for a variety of reasons. According to Charlene Chu, senior analyst at Autonomous Research, they are holding back because of weak demand, the result of tariffs and supply-chain shifts, while deflationary pressure has dented their profit margins in recent years. A recent move by Beijing to tackle excess capacity and competition in certain areas is an additional problem, she says.

All that sounds like a reason for the government to step in with aid for the economy, but stronger-than-expected growth in the first half of the year is making the overall expansion look stronger than it otherwise would. Back then, U.S. companies were snapping up Chinese goods as they rushed to get ahead of the Trump administration's tariffs.

Vivian Lin Thurston, a manager for William Blair's Emerging Markets Growth fund, doesn't expect much stimulus in 2026, assuming exports hold up, gains in tech stocks continue, and the companies' plans for spending remain robust. She sees further gains for new-economy companies, arguing that rising earnings mean valuations will remain attractive even after the stocks' surge this year.

But how things play out depends in part on the outlook for global artificial-intelligence spending, and if the AI-stock bubble bursts in the U.S. A pullback in U.S. AI stocks would hit Chinese tech as well, Thurston says. Another potential spoiler: If the Federal Reserve keeps interest rates higher than expected, it could take momentum out of riskier assets including Chinese stocks, she adds.

On the positive side is that Beijing itself is a buyer of Chinese stocks. The so-called national team buys exchange-traded funds, and insurers are encouraged to increase their holdings of equities.

The 202 outlook for the world's second largest economy is less favorable. Many analysts expect middling growth, at best, because pre-tariff buying won't offer the boost to sales it did this year. And exports clearly matter more than they did in the past.

Five years before the Covid-19 pandemic, net exports accounted for an average 1% of China's GDP growth, while consumption powered 64%. In the last five years, net exports contributed 16% while consumption was less than half, according to the China-focused research firm Sinology.

For China's economy to muddle along, Chu says, the U.S. economy needs to do well and keep buying Chinese goods, even if they are no longer coming via Vietnam or Malaysia. Despite the U.S. tariffs, China's trade surplus hit a record $1 trillion in the first 11 months of the year as it increased sales to the rest of the world.

Beijing appears to recognize that the economy can't rely only on exports or investment. A collection of commentaries by Xi Jinping, published in December in Qiushi, a magazine closely read by policymakers, sparked optimism the government could be ready to act. "Expanding domestic demand is a strategic choice" was the title.

Rory Green, head of China research at TS Lombard, sees consumption as a potential national security issue. He argues that a minimum level of growth is critical to social stability, as well as Beijing's power and ambitions in tech.

The commentaries, he says, signal that Xi may prioritize boosting domestic demand in the way he pushed technology self reliance in 2012. That could help Beijing deal with calls from the U.S., European Union, and even the International Monetary Fund to rely less on exports and more on its own domestic demand, says Brendan Ahern, chief investment officer at KraneShares, a China-focused asset manager.

Any shift will take time. For now, analysts expect smaller efforts, like free kindergarten and the subsidies Beijing has rolled out for births. Efforts to develop domestic travel, sports, and entertainment to encourage older Chinese to spend their ample savings are another part of the picture.

Investors tiptoeing back into Chinese stocks may want to consider companies that would benefit both from the rise of AI and a potential effort by Beijing to boost consumption. The internet companies Alibaba Group, Tencent and Baidu, as well as e-commerce companies like JD.com and PDD, fit the bill.

Write to Reshma Kapadia at reshma.kapadia@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

JD.com's 4Q revenue growth may come under pressure amid softer Chinese retail sales, Citi analysts say in a note. The slowing of growth in China's online retail sales to 5.4% in November from 8.1% in October is largely expected due to a high base, they say. The country's total home appliance sales slid 19.4% on year last month, reflecting "continued lapsing" of the trade-in program that will have a negative read-through to JD's growth rate in November, the analysts say. JD has been one of the e-commerce platforms that benefited most from China's trade-in program. Citi has a buy rating and a target price of $44.00 on JD's ADRs, which last closed at $29.44. (tracy.qu@wsj.com)

By Tracy Qu

Chinese e-commerce giant JD.com has pledged billions of dollars in housing support for riders, sweetening the pot for workers amid an instant-delivery boom that is fueling competition.

The Beijing-based company plans to invest 22 billion yuan, equivalent to $3.12 billion, over the next five years, according to a post on its official WeChat account Friday. The investment will provide 150,000 homes for delivery riders, it said.

Rival food-delivery giant Meituan made a similar commitment last month, saying it would invest 10 billion yuan to improve its couriers' welfare system, including providing pension insurance for all riders and a decent salary.

The moves come as the two Chinese companies, as well as Alibaba Group, have been caught in a food- delivery price war since early this year, which has eaten into profits.

In the third quarter, JD.com's net profit slumped 55% due to heavy spending on food delivery, while Meituan swung to a loss for the first time in nearly three years, reeling from the cost of defending its industry leadership.

Delivery workers' rights and welfare have become a key social issue in China in recent years, and tech companies are responding to these concerns. Labor rights for riders are often complex, which can lead to workers not receiving the support and compensation they are entitled to.

Write to Tracy Qu at tracy.qu@wsj.com