Chinese search giant Baidu Inc. has approved a plan to buy back as much as $1 billion of its own shares over the next 12 months, a move that may help prop up its stock as global market volatility grows.
Its board has green-lit a program to use existing cash to buy shares in the open market at prevailing prices, the Beijing- based company said in a statement Wednesday. It will review that program periodically and may adjust its terms and size.
Baidu’s shares are up more than 7 percent this year, just underperforming the Nasdaq Composite’s gain but outstripping larger rival Tencent Holdings Ltd., which is down 7 percent in 2018.
Baidu has a market cap of almost $84 billion with free cash flow last year of $28 billion. A $1 billion buy back program might be a new departure for the company but it is unlikely to be large enough to influence investor interest beyond the sensational headline.}
The share has pulled back to test the region of the trend mean but has a history of dipping below it over the course of the multi-month consolidation. Downward dynamics proliferate if we look at the internal, dynamics of the range suggesting a battel is being fought between the bulls and bears. It will need to hold the break above $200 if medium-term scope for continued upside is to be given the benefit of the doubt.
Tencent lost consistency at the penultimate high and is now trading below the trend mean. It needs to rally soon and in a dynamic manner to question top formation completion characteristics.
Tencent is a major constituent of the MSCI Emerging Markets Index by virtue of being listed in Hong Kong as opposed to the USA. The net effect is the Index shares a high degree of commonality with the Hang Seng.
Alibaba has pulled back to the region of the trend mean and is showing initial signs of steadying. It will need to hold the $180 level if medium-term scope for continued upside is to be given the benefit of the doubt.
The primary near-term bullish argument likely to influence Chinese tech companies listed overseas is the potential opening up of the Chinese Depository Receipt market which is expected to move forward in July.