Investments

6 Months Ended

Jun. 30, 2020

Schedule of Investments [Abstract]

Investments

4. INVESTMENTS

Short-term Investments

As of June 30, 2020, the Company’s short-term investments comprised of only debt securities. Short-term held-to-maturity securities were mainly deposits in commercial banks with maturities of less than one year for which the Company has the positive intent and ability to hold those securities to maturity. The short-term available-for-sale securities include wealth management products issued by commercial banks and other financial institutions.

During the six-month periods ended June 30, 2019 and 2020, the Company recorded interest income from its short-term investments of RMB1.8 billion and RMB2.5 billion (US$351 million), in the condensed consolidated statements of comprehensive income, respectively.

Short-term investments classification as of December 31, 2019 and June 30, 2020 were shown as below:

	As of December 31, 2019
	Cost or Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses		Gross unrealized gains		Gross unrealized losses		Fair value
	RMB		RMB		RMB		RMB		RMB		RMB
	(In millions)
Held-to-maturity debt investments		107,287		367		—		—		—		107,654
Available-for-sale debt investments		5,440		—		—		197		—		5,637

	As of June 30, 2020
	Cost or Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses		Gross unrealized gains		Gross unrealized losses		Fair value
	RMB		RMB		RMB		RMB		RMB		RMB		US$
	(In millions)
	(unaudited)
Held-to-maturity debt investments		125,022		1,049		—		—		—		126,071		17,844
Available-for-sale debt investments		7,138		—		—		14		—		7,152		1,012

Long-term Investments

Equity investments at fair value with readily determinable fair value

Equity investments at fair value with readily determinable fair value represent investments in the equity securities of publicly listed companies, for which the Company does not have significant influence.

Equity investments at fair value without readily determinable fair value

In accordance with ASC 321, the Company elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. Impairment charges recognized on equity investments measured at fair value using the measurement alternative was RMB527 million and RMB2.3 billion (US$327 million) for the six-month periods ended June 30, 2019 and 2020, respectively.

The total carrying value of equity investments measured at fair value using the measurement alternative held as of December 31, 2019 and June 30, 2020 were as follows:

	As of December 31, 2019			As of June 31, 2020			As of June 31, 2020
	RMB			RMB			US$
	(In millions)
				(unaudited)
Initial cost basis		21,211			21,911			3,101
Cumulative unrealized gains		5,636			6,884			974
Cumulative unrealized losses (including impairment)		(2,161	)		(4,272	)		(605	)
Total carrying value		24,686			24,523			3,470

Total unrealized and realized gains and losses of equity securities without readily determinable fair values for the six-month periods ended June 30, 2019 and 2020 were as follows:

	For the six months ended
	June 30, 2019			June 30, 2020			June 30, 2020
	RMB			RMB			US$
	(In millions)
	(unaudited)
Gross unrealized gains		1,157			1,340			190
Gross unrealized losses (including impairment) (i)(ii)		(527	)		(2,689	)		(381	)
Net unrealized gains (losses) on equity securities held		630			(1,349	)		(191	)
Net realized gains on equity securities sold		222			252			36
Total net gains (losses) recognized in others, net		852			(1,097	)		(155	)

(i) Gross unrealized losses (downward adjustments excluding impairment) were nil and RMB100 million (US$14 million) for the six-month periods ended June 30, 2019 and 2020, respectively.

(ii) Including re-measurement losses of nil and RMB278 million (US$39 million) relating to previously held equity interest in business combination achieved in stages for the six-month periods ended June 30, 2019 and 2020, respectively.

Equity method investments

The carrying amounts of the Company’s equity method investments were RMB27.1 billion and RMB25.7 billion (US$3.6 billion) as of December 31, 2019 and June 30, 2020, respectively. For the six-month periods ended June 30, 2019 and 2020, the impairment recognized for equity method investments were nil and RMB150 million (US$21 million), respectively.

Investment accounted for at fair value

Long-term equity investments in unlisted companies held by consolidated investment companies are accounted for at fair value in accordance with ASC 946-320. These investments are carried at fair value with realized or unrealized gains and losses recorded in “Others, net” in the condensed consolidated statements of comprehensive income.

The methodology used in the determination of fair values for held-to-maturity debt investments, available-for-sale debt investments, equity investments with readily determinable fair values and other investment securities accounted for at fair value were disclosed in Note 7.

Long-term investments classification, excluding equity method investments and equity investments at fair value without readily determinable fair value, as of December 31, 2019 and June 30, 2020 were shown as below:

	As of December 31, 2019
	Cost or Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses			Gross unrealized gains		Gross unrealized losses			Fair value
	RMB		RMB		RMB			RMB		RMB			RMB
	(In millions)
Equity investments at fair value with readily determinable fair value		11,769		—		—			2,195		(2,630	)		11,334
Available-for-sale debt investments		3,913		—		—			138		(81	)		3,970
Investments accounted for at fair value		1,309		—		—			597		(87	)		1,819
Long-term held-to-maturity investments		496		—		(5	)		—		—			491

	As of June 30, 2020
	Cost or Amortized cost		Gross unrecognized holding gains		Gross unrecognized holding losses		Gross unrealized gains		Gross unrealized losses			Fair value
	RMB		RMB		RMB		RMB		RMB			RMB		US$
	(In millions)
	(unaudited)
Equity investments at fair value with readily determinable fair value		12,346		—		—		3,632		(3,509	)		12,469		1,765
Available-for-sale debt investments		3,528		—		—		186		(113	)		3,601		510
Investments accounted for at fair value		1,430		—		—		554		(153	)		1,831		259
Long-term held-to-maturity investments		502		11		—		—		—			513		73

Available-for-sale debt investments are convertible debt instruments issued by private companies and investment in preferred shares that is redeemable at the Company’s option, which are measured at fair value. Investment in preferred shares that are redeemable at the Company’s option have no contractual maturity date.

The following table summarizes the estimated fair value of available-for-sale debt investments with stated contractual dates, classified by the contractual maturity date of the investments:

	As of December 31,		As of June 30,
	2019		2020		2020
	RMB		RMB		US$
	(In millions)
			(unaudited)
Due in 1 year		505		—		—
Due in 1 year through 5 years		10		1,550		220
Due in 5 years through 10 years		1,486		—		—
Not due at a single maturity date		1,969		2,051		290
Total		3,970		3,601		510