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Alibaba Posts Strong Sales Growth Amid SEC Accounting Probe

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  • Alibaba Posts Strong Sales Growth Amid SEC Accounting Probe

Alibaba recorded better than expected profits and revenues in its third quarter as the Chinese ecommerce group played down concerns about China’s flagging economy and an ongoing investigation, ahead of the annual Singles Day online shopping spree.

The company said that preparations for Singles Day on November 11, the world’s largest online shopping day, have not been affected by an investigation into its accounting practices by the US Securities and Exchange Commission disclosed in May.

Among its questions, the SEC has asked about the large unaudited numbers Alibaba publishes on sales on Singles Day, which analysts took to mean the measure it uses for total sales across its platforms, gross merchandise value.

Alibaba did not report gross merchandise value in the second quarter for the first time, but during a conference call with analysts on Wednesday, Daniel Zhang, chief executive, said that “GMV so far looks good and growth is on track”.

Joe Tsai, Alibaba executive vice-chairman, also told analysts that there was “no factual basis” to a story in the New York Post newspaper alleging that a high-level whistleblower was helping the SEC in its investigation. The SEC has said that its investigation did not mean Alibaba had breached any laws.

Shares in the group initially climbed more than 4 per cent in pre-market trading in New York but dropped lower after the market opened.

Alibaba said sales in the quarter to the end of September rose 55 per cent to Rmb34.3bn ($5.1bn) compared with the year before, topping Wall Street estimates of Rmb33.9bn. Earnings per share on an adjusted basis rose to Rmb5.26 from Rmb3.61 a share a year ago, which beat expectations of Rmb4.69.

Alibaba makes its money through selling space to merchants on its marketplaces, in the form of fees and advertising revenues. Alibaba’s revenues growth has continued to be strong, despite an economic slowdown across China, mainly from a 47 per cent increase in online marketing services revenues, the group said.

In the period Alibaba reported 439m annual active buyers, a rise of 14 per cent compared with last year.

“We operate a superior marketplace,” said Mr Tsai, adding that Alibaba has fewer limits than its competitors on the amount of advertising load that consumers will accept on an ecommerce website.

“There is no church and state when it comes to content and ads, because they come to the site with very high commercial intent,” he said.

He also cited technological advances in using data to increase click-through rates.

“Our ability to personalise every single user interface, so every person coming to the platform can see different products, and different recommendations; that drastically increases our ability to generate relevant clicks … and drive volumes,” said Mr Tsai.

Net income dropped to Rmb7.1bn, from Rmb22.7bn, the company said, blaming the fall on a large non-cash revaluation gain last year from its interest in Alibaba Health.

Alibaba said that revenue rose 41 per cent in its core ecommerce business to Rmb28.5bn. Meanwhile, its cloud computing unit notched sales growth of 130 per cent to Rmb1.5bn.

Mr Zhang added: “Beyond the strong performance of our core commerce business, we are pleased with the continued rapid growth of our cloud computing business. We also see huge potential in our newly integrated digital media and entertainment unit.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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