When a company says it will donate all its profits to charity, the normal reaction of investors is to run. If the company is Chinese, they pour more money into the stock.
Shares of Pinduoduo rose 22 per cent after the ecommerce group pledged to donate all its earnings until the total reaches $1.5bn. It has started by giving away its second-quarter net profits.
The donation looks like a pre-emptive attempt to reduce or fend off a fine for anti-competitive behaviour. Regulators hit the group’s main rival Alibaba with a $2.8bn antitrust fine after a probe in April. Pinduoduo is exposed to attacks by antitrust watchdogs because of its size. It has the biggest user base of any Chinese ecommerce group.
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