American Express stock price pops 3% as its Chinese JV gets final approval to launch

Shares of American Express (NYSE: AXP) gained 3% on Friday to partially offset losses from earlier in the week. The People’s Bank of China (PBOC) finally announced today it has approved a network clearing licence for the American Express joint venture. 

Fundamental analysis: American Express enters the biggest card market in the world

The PBOC issued a statement today to confirm that American Express’ joint venture in China – Express (Hangzhou) Technology Services Co. – has received a network clearing license to launch operations. A joint venture between American Express and LianLian DigiTech Co Ltd. will now become the first foreign credit card company to launch onshore operations in China.

“This approval represents an important step forward in our long-term growth strategy and is a historic moment, not only for American Express but for the continued growth and development of the payments industry in mainland China,” Stephen J. Squeri, chairman and chief executive officer of American Express, said.

Interestingly, American Express has received a nod from the PBOC before Visa did, although the latter submitted its application back in 2018 and is still awaiting approval. On the other hand, the former applied in January and today became the first foreign card company to receive approval. 

MasterCard also received a green light from the PBOC, but unlike American Express, it lacks a network clearing license. American Express is required to start the clearing service within six months. The US-based financial giant reported a 76% decline in profit for the first quarter.

It is believed that China will soon become the biggest card market in the world, estimated to be worth around $27 trillion. 

Technical analysis: Gains halved

American Express stock price gained 3% to mitigate losses made earlier in the week. The price closed around 7% lower this week after making gains of over 15% in the previous week.

Technically, shares of American Express failed to clear the resistance around $115, which caused the price to rotate lower. Moreover, the stock market has been under pressure in the last two days of the week amid the increase in the number of COVID-19 cases worldwide.

On Thursday, shares of American Express moved lower to touch the weekly support around the $98 mark, before bouncing back on Friday to close the week above $100. 

Summary

American Express stock price moved 3% higher on Friday to close the week above the $100 handle. However, shares still closed over 7% in the red as the wider stock market recorded ] its biggest weekly losses since March.