PDD builds $38bn cash pile as it denies investors payouts

Good morning. Today we’re covering:

• The German far-right’s election victory

• Why Hong Kong is telling service workers to smile more

• The backlash to Brazil’s X ban

But first, Chinese ecommerce group behind Temu has accumulated the largest cash pile of any listed company that does not pay a dividend or buy back shares.

US-listed PDD Holdings is sitting on a $38bn net cash position, according to an FT analysis. That is more than twice the size of the nearest contender, Elon Musk’s Tesla.

While PDD has soared in value after expanding from China to at least 49 markets in the past two years, its hoarding of cash is regarded as a “red flag” by some investors, who say its financial statements are opaque and its communications sparse.

The Shanghai-based company’s share price fell 31 per cent last week after it warned that record profitability was likely to decline and ruled out dividends or buybacks “for the foreseeable future” in a conference call during which it took questions from only two analysts.

Most of the world’s large companies pay dividends or buy back shares, with even the acquisitive and dividend-averse conglomerate Berkshire Hathaway repurchasing billions of dollars in stock this year.

PDD told the FT: “Each company makes decisions based on its unique circumstances and strategic considerations. To imply that there is a ‘red flag’ simply because Company A does not follow the same approach as Company B is, quite frankly, absurd.”

Here’s what else I’m keeping tabs on today:

• Economic data: S&P Global Manufacturing PMI covering August is due for several countries including India, China, Japan, South Korea, Taiwan and Indonesia, which also reports its consumer price index for the month.

• Holidays: Financial markets are closed in Vietnam for independence day and in the US and Canada for labour day.

Do you have questions about PDD or other Chinese ecommerce giants? Reply to this email and include your name and where you’re writing from, and we’ll answer them in a special weekend edition of FirstFT.

Five more top stories

1. The Alternative for Germany has won elections in the eastern region of Thuringia, the first time a far-right party has secured victory in a state poll in the country’s postwar history. Here’s more on the disastrous result for Chancellor Olaf Scholz and his three-way coalition government.

2. A prominent shareholder in Seven & i Holdings has set a deadline for the Japanese convenience store giant to update investors on the takeover bid by Canada’s Couche-Tard. US-based Artisan Partners sent a letter to the board of the 7-Eleven parent company warning that management will be “held accountable” if it did not immediately open negotiations with the buyer. 

3. The bodies of six hostages, including that of a young US citizen, have been retrieved from Gaza, deepening a wave of public anger at Israeli Prime Minister Benjamin Netanyahu for failing to deliver a deal with Hamas to release the remaining captives. Israel’s largest trade union federation has called a general strike for today, which will close much of the country.

4. Brazil’s Supreme Court is facing a backlash over its decision to ban Elon Musk’s X, amid rising concerns that the top court has gone too far in its fight against fake news and misinformation online. The court’s decision to fine users who access the platform using virtual private networks has been even more contentious.

5. Kamala Harris is planning to spend $370mn on advertising between early September and the US election in November. The Democratic candidate’s attempt to turn a surge in donations into a sustainable polling lead over Donald Trump will include what her campaign is describing as the biggest digital ad buy in the history of American politics.

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News in-depth

Hong Kong’s new tourism campaign focuses not on potential visitors, but on the city’s own workers and their reputation for brusque service. “We should smile more, we should be more courteous, we should be more helpful,” Hong Kong chief executive John Lee said when the campaign was rolled out in June. Authorities hope the campaign can help draw back tourists and revive the Chinese territory’s floundering economy. But for some tourists, civility is the least of their concerns.

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