Alibaba

[Wildreamz]

Yes. It now all about crystal-balling the faith of Alibaba, post regulations.

I think they would not only survive, but thrive; as they are too important and valuable to Chinese economy and influence, both domestically and internationally. Even Meituan may look interesting right now, if one can correctly predict the extend of the impact of regulations.

(not investment advise)

[Wildreamz]

..

In any case, the going had been good for the early owners of these tech stocks. Only the late comers suffered.

IMO, investing in general is about having some kind of insight about the future. In this case, right now (~HKD180), is Alibaba still "early" or "late"?

I'm inclined to believe it's still very early. Still haven't seen the full fruit of their labor in chip design and cloud, which I feel is very critical for China's current 5 year plan (2021 - 2025): https://en.wikipedia.org/wiki/Five-year_plans_of_China

[Wildreamz]

Recently viral (Chief Economist Chen Li at Soochow Securities): https://finance.sina.com.cn/stock/market...1368.shtml

      我们认为基本国策已经发生变化。过去十年，中国希望学美国通过发展服务业来推动GDP的增长。但经过了2018年中美贸易摩擦和2020年新冠疫情的两次冲击，让最高层意识到工业体系的完整和完备是非常重要的。而且我们需要补短板，不让别人卡脖子才能够从疫情中第一个恢复。

　　于是在过去的九个月，我们看到在任何场合都取消了关于服务业占比要提高以及刺激第三产业发展的说法。在 2021 年的政治局政府工作报告会议里专门提出制造业占 GDP 的比例不再下降。这说明在基本发展道路上，我们已经抛弃了美国道路，转向了德国道路。通过发展制造业带动GDP未来的进一步增长。

　　所以重制造、轻服务已经成为未来三到五年甚至五到七年的基本政策。在制造业得到资本市场大力融资，政策扶持之外，我们看到服务业一系列的遏制政策都出台了，针对教育、医美、电子烟、电商、传媒、娱乐、游戏行业。这些服务业的政策都从原来无监管变成加强监管。所以基本的国策发生了重大的变化。

[karlmarx]

..

In any case, the going had been good for the early owners of these tech stocks. Only the late comers suffered.

IMO, investing in general is about having some kind of insight about the future. In this case, right now (~HKD180), is Alibaba still "early" or "late"?

I'm inclined to believe it's still very early. Still haven't seen the full fruit of their labor in chip design and cloud, which I feel is very critical for China's current 5 year plan (2021 - 2025): https://en.wikipedia.org/wiki/Five-year_plans_of_China

I don't have the vision. So, for better or worse, I shall stick to my knitting.

Twenty or so years ago when the internet was still in its infancy, Google and Facebook were still unprofitable and the internet was largely ad-free. Or at least the ads weren't noticeable. I could never have imagined selling ads would someday make them so much money. I brushed them off as unprofitable and speculative tech stocks, as they were widely known to be in the late 90s and early noughties. Look how far they have come.

Between American tech and Chinese tech, I will bet that the former has a longer growth runway since it has a larger market (the world ex-China) compared to the latter (mainly just China). And it looks like CCP's recent actions will only further limit the opportunities of Chinese tech to expand into other markets. China aiming to be like Russia in developing its own sovereign internet?

[Wildreamz]

Good point, but you don't need to have 20 years visibility into the future to bet on Alibaba/Alphabet/Facebook etc. I only started investing in Google, Facebook etc. in 2016, at that point, they are already very profitable. 

Incidentally, the size of Google in 2016, was around Alibaba today (maybe slightly larger).

By the way, Alibaba has already has important presence overseas, I just don't think their cloud infrastructure business can penetrate Western markets due to data security concerns.

[Wildreamz]

One of the more spectacular reversal in stance, and pro-investor statements (including on VIE companies), issued by the Chinese Central government, maybe ever:



(NOT investment advise)

[AQ.]

So far, the main event that really left a huge impression on me was the ability of the CCP to declare an entire industry not-for-profit overnight. That has an impact on valuation for investing into any sector in China (at least for me). 

Why did CCP do it?
a. In a way it is right cos these are unnecessary obstacles for childbirth and also children mental health
b. but some kids prob need tuition and it is not clear commercially driven ones do not do the job. I find the move rather excessive and scary.
c. is this move really for social benefits or is it to teach the industry a lesson?
d. Or is this really targetting certain people? 

Other than that:
1. Fines for antimonopoly for Ali
2. Meituan potential min wage
3. Tencent anti-exclusivity
4. Didi user data 
5. Stopping Ant listing

etc

did not really surprise me cos...it was clear these guys are getting too big and too powerful. One risk for Tencent is the risk of the gaming industry -  the obsession/addiction of the youth over gaming is real.

[Wildreamz]

I read about a similar regulation in South Korea several years ago: https://www.todayonline.com/singapore/s-...ition-tide

Interesting to compare and contrast their approaches. 

The Chinese Central government stance, seems to have soften a bit over the last few day's market turmoil.

[specuvestor]

Think there is underlying urgency that cost of living including property, medical and education is becoming difficult for the common person while the number of billionaires blossom, that has to be resolved post the CCP centennial.

Not to mention Baba is majority owned by Softbank and Tencent by Naspers, and they virtually control the eCommerce payment system in China. The fact that internet media can sanction and render toothless a sitting US president also present a clear and present danger to the establishment.

So data leak and big data management become an issue and also how compliant the companies can be if listed in US. So instead of US discouraging or pressuring the China ADRs, China is turning the tables first which they now have the capacity to stand up to it. And of course political considerations are also intertwined in the equation.

I think China will continue to have policies that favor their strategic goals rather than let the invisible hand work its way through, with their unique Chinese socio-capitalist model, in some ways adopted from SG as well. But I do hope their draconian policies be better conceptualized and executed.

So far, the main event that really left a huge impression on me was the ability of the CCP to declare an entire industry not-for-profit overnight. That has an impact on valuation for investing into any sector in China (at least for me). 

Why did CCP do it?
a. In a way it is right cos these are unnecessary obstacles for childbirth and also children mental health
b. but some kids prob need tuition and it is not clear commercially driven ones do not do the job. I find the move rather excessive and scary.
c. is this move really for social benefits or is it to teach the industry a lesson?
d. Or is this really targetting certain people? 

Other than that:
1. Fines for antimonopoly for Ali
2. Meituan potential min wage
3. Tencent anti-exclusivity
4. Didi user data 
5. Stopping Ant listing

etc

did not really surprise me cos...it was clear these guys are getting too big and too powerful. One risk for Tencent is the risk of the gaming industry -  the obsession/addiction of the youth over gaming is real.

[Wildreamz]

..

One risk for Tencent is the risk of the gaming industry -  the obsession/addiction of the youth over gaming is real.

Agreed. But I must stress that this is not an inherent problem with "Gaming" (as in video games) as a sector per se; but the way Tencent, and many Chinese companies, approaches gaming. Mainly exploiting the weakness of human psychology (loot boxes, energy systems, free-to-play, but pay to win etc.) to maximize profit growth. This is not net value-add to stakeholders; and are businesses I avoid. 

Loot boxes: https://www.youtube.com/watch?v=wroOJqxFPe8

Energy Systems: