TikTok refugees are helping power up some China consumer stocks
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Over two million users flooded to Xiaohongshu, or RedNote, after the US Supreme Court signalled it was likely to uphold a law banning the popular TikTok app
PHOTO: AFP
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WASHINGTON – The droves of Americans turning to Chinese-made social apps as an alternative to TikTok are helping boost some mainland consumer stocks.
More than two million users, a potential new customer base, flooded to Xiaohongshu – now known in the US as RedNote – in just two days after the US Supreme Court signalled it was likely to uphold a law banning the popular TikTok app.
Stocks such as Hangzhou Onechance Tech and Yantai China Pet Foods have surged since then on optimism they will benefit as the new users search out Chinese-made goods.
“This phenomenon certainly has lifted sentiment for many investors,” said fund manager Chen Shi from Shanghai Jade Stone Investment Management.
“The cross-border discussions show that Chinese goods do have appeal and are competitive in the eyes of the US consumer.”
Xiaohongshu, described as a Chinese version of Instagram, became the most downloaded free app on Apple’s iPhone download charts and climbed into the top 10 on Alphabet’s Google Play Store.
TikTok restored service in the US on Jan 19 following a brief shutdown after then President-elect Donald Trump delayed enforcement of a national security law and said he would give its owners more time to find a buyer.
Digital-marketing firm Hangzhou Onechance Tech jumped more than 70 per cent from its close on Jan 13 to its high three days later amid speculation Chinese companies would step up their social media exposure on Xiaohongshu or increase content for English-speaking users.
Yantai China Pet Foods spiked as much as 25 per cent over three days from Jan 14 as new US users to Xiaohongshu were asked by Chinese ones to share a photo of their pet as a so-called “cat tax”.
Manufacturers of home appliances, apparel and snacks that have a high presence on the app may also be possible beneficiaries, analysts said.
“American users have great consumption potential, and if they stay on the platform, will boost Xiaohongshu’s ecosystem and benefit the multi-channel-network, cross border e-commerce, marketing companies and brands with overseas business,” Sinolink Securities analyst Zhao Zhongping wrote in a Jan 19 research note.
TikTok’s fate remains in limbo after Mr Trump’s latest announcement, and there is uncertainty about whether its parent Bytedance is willing to find a buyer and avoid a permanent shutdown. For the time being, at least, there is still some chance the app will survive and lure back its original user base.
At the same time, the increasing influence of Xiaohongshu may be here to stay.
Nasdaq-listed language-learning app Duolingo said on Jan 16 there had been a 216 per cent spike in the number of US users studying Chinese, helping send up its shares by more than 10 per cent in three days.
China-listed tourism stocks also gained from an increase in searches for flights and hotels in the country, with China Tourism and Culture Investment Group gaining by the 10 per cent limit for a fourth day on Jan 16. BLOOMBERG
