Amazon To Close In India And China Over Unfavorable Laws
Ben Myers | Nov 04, 2014 03:17AM ET
Amazon.com (NASDAQ:AMZN) may reportedly conclude operating in India over various laws that it considers to be unfavorable. In a filing to the Securities and Exchange Commission, the giant online company additionally stated it is considering doing the same in China as well.
Withdrawal from China and India will certainly make a dent in Amazon’s ambitions of accelerating growth in international markets, as competitors continue to make their mark and gobble up precious market share. The move is additionally expected to affect the company’s revenue stream going forward as China and India are considered the world’s fastest growing multi-billion dollar online shopping markets.
Uncertainties over the interpretation of laws in both China and India have been cited as the primary reason behind a potential close of operations there. Amazon is desperately trying to avoid a scenario whereby the governments of those two countries take a contrary view of the current laws and subsequently charge the company for breaking them.
In a recent statement, Amazon additionally said it might be unable to continue its operations in India and China if they fail to raise sufficient funding. The company is further concerned that the Chinese government may enforce contractual relationships that may not provide a conducive operating environment. Amazon is obviously looking to avoid incurring millions of fines should it be found to have operated against these stipulated laws due to misinterpretations.
Amazon is especially taking issue with the Indian government, which has restricted ownership control of Indian companies by foreign entities in the e-commerce sector. Just like its Indian rivals, Amazon offers its platform to sellers across the country to enable them sell goods and make the deliveries. Closing shop in India may additionally come in the wake of Amazon reportedly being under investigations over tax related issues in Karnataka.
Back in July, Amazon announced plans of accelerating expansion in India after it committed a $2 billion investment package. Its rival Flipkart also announced a similar sort of investment package consisting of $1 billion.
Technicals:
Amazon, after moving down all the way from $347 to a low of $287 has finally started to shift upwards. The stock is currently trading a tad below its 20-Day EMA of $305.68. One thing for bulls to cheer for is that there is inherent value buying at lower levels.
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When looking at the chart above, whenever Amazon has fallen to the $285-$290 range, more often-than-not it has bounced back. It seems the same should be expected in coming trading sessions.
Actionable Insight:
Buy Amazon.com above $306 for target of $310, $315, with stop-loss of $305.1
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