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Line has made its long awaited debut on the New York Stock Exchange yesterday, reports CNBC.

The Japanese messaging app spiked 30% in market debut after opening at $42 per share in what appears to be the biggest tech IPO of this year. The company is owned by Naver, a South Korean Internet company, who offered 22 million shares on the New York Stock Exchange and 13 million on the Tokyo Stock Exchange. Shares are trading under the symbol ‘LN’.

Shares of the company jumped more than 30% valuing the company at more than $9 billion. The stock closed at $26.61.

The company was formed in 2011, and is currently the seventh most used messenger app in the world, with more than 35 apps for downloads. Stickers are a main source of revenue, contributing to more than $270 million in sales. Line’s most popular markets are Japan, Taiwan, Thailand and Indonesia.

Moving forward, Line will be focusing more on domestic growth rather than global expansion. The company will also be moving into taxi hailing and music streaming to compete with Facebook and WeChat. Line sees an opportunity in the expansion of services as more customers become accustomed to a one-stop-shop platform.

Line is the fifth tech company to go public this year. Since 2015, 14 companies have gone public.

The entire IPO market has slowed down this year. Last month, 31 companies had gone public in the US, down from 69 in Q1 of 2015.

Line debuts as 2016's biggest tech IPO

Source: bloomberg.com

Dual IPO Listing: Japan

According to Bloomberg, Line debuted on the Tokyo Stock Exchange today, and opened at $46 (4,900 yen), compared to its IPO price of $31 (3,300 yen) giving it a valuation of approximately $9.5 (1 trillion yen). Yoshihiro Okumura, GM at Chiba-Gin Asset Management Co, comments,

As New York debuted strongly, we’re seeing it being bought here too. A lot of the buying is coming from retail investors.

Line’s Chief Financial Officier, In-Joon Hwang said in an interview with Bloomberg that the company plans to use money for any investment opportunity to strengthen existing business in Line’s key makets, Japan, Taiwan, Thailand and Indonesia.

Update at close of trading: Line ended slightly down at the close of New York trading, valued at $8.7 billion.

Versions of this appeared in CNBC and Bloomberg on July 14 & 15. Read the full versions here and here.

Alibaba bought a high stake in Intime Retail 2 years ago. Source: bidnessetc.com

Alibaba bought a high stake in Intime Retail 2 years ago. Source: bidnessetc.com

Alibaba has raised its stake in Chinese department store operator Intime Retail Group, and investors aren’t quite sure why, according to insights by Bloomberg.

In 2014, Alibaba made a $692 million investment in Intime Retail, a Chinese shopping mall and department store operator in the hopes of launching Online-to-offline services (O2O). Since then, the deal has not exactly gone quite as planned. On June 30, Alibaba announced that it will be upping its stake from 10% to a much larger stake of 28% ownership.

If Chinese physical retail were a growing business, the Intime deal would have made sense. As it would have if Alibaba had some great bricks and mortar insight that could turn Intime around, or if Intime’s stores offered synergies.

Back in 2014, O2O was a buzzword used by China’s internet giants, such as Alibaba and Tencent. Ecommerce giants thought that by simply connecting online users with offline services, they would be able to connect more deeply with consumer and spending habits. None of that was so simple back then, nor is it now.

Intime Retail’s business is in atrophy, like the rest of the offline retail industry in China. Store sales saw a drop in the same year that Alibaba acquired shares. The ecommerce giant was also unable to innovate the offline retail industry, as it built an empire luring customers away from traditional stores in the first place.

Alibaba increases stake in Intime retail

Intime investors do not seem excited by this announcement, as the stock is now 18.4% below the 97 cents Alibaba initially paid. Alibaba’s focus on offline ecommerce has not increased Intime’s profit margins and its on-going partnership has been somewhat understated.

It might have made sense for Alibaba to use Intime as a test bed for combining in-store shopping with online payments, and thus help its Alipay platform make the transition into the wider Chinese economy. Alibaba and Intime already did such testing four months before the investment was announced — labeling the pilot project a “successful O2O collaboration” — with no equity purchase needed.

With the success of Alibaba’s online marketplaces Tmall and Taobao, perhaps it doesn’t make sense for Jack Ma to expand further into offline retail when he’s built an empire to disrupt it.

A version of this article was published in Bloomberg on July 5. Read the full version here.

Line aims to raise $1.3 billion

The launch of Line’s pop-up store, with its popular bear and rabbit characters in New York City is an effort to give exposure in the West. Source: PR Newswire

Thailand’s  most popular chat app Line is aiming to raise $1.3 billion in a dual Tokyo-New York IPO listing in July, meaning that the company is sticking to its pre Brexit target, the Financial Times reports. It has set a price range between 2,700 and about $26.50-$31.50 per share.

It announced earlier this week that it plans to sell 35 million shares, putting Line on track for the largest IPO in the global technology sector of this year.

The global equity sell-off and price volatility following the UK’s exit from The European Union have cast a dark cloud over Line’s IPO plan, especially at a time when investors were already doubting the company’s growth prospects. Despite investors’ uncertainty, the company is still confident that it should be able to raise $1.3 billion.

This news comes after a two year delay in Line’s initial listings schedule. Fund managers have commented that investor interest in technology startups have lessened and wavered with intensified risk as a consequence of the Brexit vote. Although LINE does not have presence in Europe, this follows the global reaction trend of the fallout.

The risk tolerance of investors has declined in the post-Brexit market volatility. It is also hard to put a premium on Line’s growth potential. – Ikuo Mitsui, Fund Manager at Aizawa Securities

The social messaging app’s  dominance in Japan and Thailand is seemingly not enough to convince global investors of the company’s growth potential. With many competitors in the market, this makes it harder to evaluate potential growth rate. Two-thirds of Line’s 218 million users come from Japan, Taiwan, Thailand and Indonesia, but it is not a major player in Indonesia. Line’s struggle to penetrate the US and European markets has often been brought up by industry analysts and investors.

Line’s effort to establish a name outside Asia and take on rivals, such as Facebook, is reflected in the company’s goal to sell 63% of shares in New York. The company should not be too complacent with its place in Asia, as Facebook is making a push in the region, emphasized by the announcement that it was testing social commerce platforms in Thailand, an area which is also being facilitated through Line.

Excerpts from the Financial Times on June 27. Read the full article here.

brexit impact on thailand not concerned gov, sleeping asian man

The Thai government is positive about Brexit, as officials insist that Britain’s exit from the European Union is unlikely to negatively affect any trade talks Thailand has with the EU. In fact, the Brexit will release a lot of restrictions for its trade policies with Southeast Asian countries. If Britain wanted to initiate a free bilateral trade pact with Thailand, the talks could happen instantly without waiting for a green light from EU commissioners, said Sirinart Chaimun, Director General of the Trade Negotiations Department.

Negotiations for a Thai-EU FTA were formally launched on March 6, 2013. Currently, EU commissioners were reluctant to hold any talks with Thailand until the country’s new constitution is in place. These talks were suspended following Thailand’s 2014 military coup. In June 2015, the EU said it would delay signing an agreement on closer economic and political ties, due to Thailand’s political unrest.

The Brexit will release a lot of restrictions for its trade policies with Southeast Asian countries.

In 2015, Thailand’s exports to the 28 EU countries were just under $22 billion, down 6% from 2014. Shipments to Britain were worth $4 billion. Shipments to the EU contributed to 9% of Thailand’s total export value. The numbers seem to suggest that if anything, Thailand’s own political instability has more of an impact on the country’s international trade, more than Brexit itself.

A version of this appeared in Bangkok Post on June 27. Read the full article here.

 Southeast Asian Stocks Rise As Brexit Concerns Drop

Source: finance.yahoo.com

Stocks across Southeast Asia in four countries rose as possibility of Britain remaining in the European Union increased, reducing market risks.

  • Singapore stocks closed more than 1%, led by oil and gas stocks
  • Philippines closed 0.6% higher with consumer cyclical such as Bloomberry Resorts Corp leading the market
  • Vietnam was up more than 1%, as oil and gas stocks such as Petrovietnam Gas Joint Stock Corp rose
  • Indonesia ended higher, helped by energy shares

Britons will cast their votes on June 23 in a referendum on whether to leave the EU. The probability of Britain remaining in the union rose to 72%, up from 60% in the previous week.

“Perception is that the British public is likely to vote in favour of remaining in the EU. If that is the case, it would remove the overhang of risk in the markets,” said Nirgunan Tiruchelvam, an analyst with Religare Capital Markets in Singapore.

Southeast Asian optimism in the context of Brexit

Initially, panic was spreading across markets in fear of Britain exiting the European Union but now it serves as an important reminder to protect the global market.

Countries such as Philippines has expressed optimism about the new President-elect, Rodrigo Duterte, who is beginning his six-year term on June 30.  Duterte’s economic team will be committed to boosting infrastructure, fixing traffic congestion and improve investment frameworks. Not only will this serve to improve ecommerce infrastructure and transportation roadblocks, it will also improve Philippines’ economic growth as a whole.

A version of this appeared in Jakarta Globe on June 21. Read the full article here.