Alibaba

[Wildreamz]

While cheap loans may be pro-consumer, it is on the back of the loans provided by the regional banks. The provision of loans by Ant post a systemic risk to the regional banks and the system and thus have to be curtailed. 

The CCP is usually worried about the systemic/macro risk in their policy decision. 

With most of the data residing in baba, it is logical to break up the parts and provide some check and balance in between. It may not be the most efficient system, but it allows competitors to spring up to serve different segment of the value chain.

My view is that the eco-system would be more robust post Ant when startups, private enterprise or banks come into the lending space since data is no longer the restraining factor.
  
OWH
www.weightedresearch.com

(1) The reason reginal banks trust Alibaba's credit score is probably because it has been working. ie Alibaba's credit score has been, statistically, a reliable indicator of credit worthiness. (this model is comparable/much better than current WallStreet darling Upstart Holdings)

I agree that a blackbox, private credit scoring system might pose an unknown risk to China's financial system; but I disagree that confiscation and nationalization of data entrusted to Alibaba by legislation is the solution.

(2) "The CCP is usually worried about the systemic/macro risk in their policy decision. "

Yes, but they should have regulated Ant differently. Secondly, beyond the official stated reasons, this move could also be more about reducing concentration of private wealth and power, and solidifying state control.

(3) On the surface and in the short-term, it opens up opportunity for smaller players. Bigger picture, the potential returns of innovating, being a first mover to take risks to build up valuable technology/platform/ecosystems will be diminished.

Remaining future investors/venture capital in China would need to assign a much higher risk premium, and expect much lower returns. A vicious cycle.

[CY09]

Agree with Wildreamz, the fact that banks uses Ant's credit score system and not other institution or the national rating agency shows how good a product they have created which is used. Banks are profit entities and they will use the service of the one which gives them the best interest income margin.

(2) the act of the Communist Party taking away/regulating a product once it is widely accepted by their country has frightened investors. So a lot of investors will be putting a premium on ventures creating new innovative products because once it goes mainstream, the CCP is going to step in.

This stifles innovation and hence to me, I view that China will have difficulty being a number 1 powerhouse due to this mentality. AWS, Microsoft all came about because they created products they were domineering. China at best will only be able to develop an existing "good" to better through incremental progress. However, it will never be a country creating a "good product", with such a mindset

[Wildreamz]

Don't know where to put this, I will put it here, as it relates to China's recent tech crackdown:

TikTok parent ByteDance adds time limit for kids under 14 on its video app in China

https://www.theverge.com/2021/9/19/22682...-app-china

The app’s youth mode keeps it in line with the Chinese government’s new restrictions on access to video games for younger children. Teens under 14 will be able to access Douyin between 6AM and 10PM, but won’t be able to use the app outside of that window, the company said. The rules will apply to “real-name authenticated users” under 14, and the company encouraged parents to help their children complete the real-name authentication process, or activate youth mode when prompted by the app.

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Glad even China understands how social media works (dopamine). Pretty sure regulation will not stop here for China; will be interesting to see if and how the rest of the world catches up.

[Wildreamz]

https://www.straitstimes.com/business/co...s-scrutiny
Alibaba seeks to exit Mango Excellent Media after Beijing's scrutiny

SHANGHAI (BLOOMBERG) - Alibaba Group Holding is seeking to sell its entire stake in a local television network after the Chinese government's scrutiny over media and the technology industry intensified.

An Alibaba investment arm plans to sell its 5.01 per cent stake in Mango Excellent Media, a TV shopping and entertainment network based in the central province of Hunan, Mango said in a filing late on Thursday (Sept 23). The e-commerce giant, which made the purchase only nine months ago, is seeking a waiver from a one-year lock-up agreement, the filing showed.

[Wildreamz]

Charlie Munger doubled down on Alibaba bet (13F): https://whalewisdom.com/filer/daily-jour...s_tab_link

[Wildreamz]

Xi Jinping Scrutinizes Chinese Financial Institutions’ Ties With Private Firms

https://www.wsj.com/articles/xi-jinping-...malertNEWS

Chinese President Xi Jinping is zeroing in on the ties that China’s state banks and other financial stalwarts have developed with big private-sector players, expanding his push to curb capitalist forces in the economy.

Mr. Xi, who started his campaign late last year with a regulatory assault on private technology giants, is launching a sweeping round of inspections of financial institutions. According to people with knowledge of the plan, the inspections, announced in September with few details, focus on whether state-owned banks, investment funds and financial regulators have become too chummy with private firms, especially some that have recently landed in Beijing’s crosshairs, such as property giant China Evergrande Group, ride-hailing company Didi Global Inc. and financial-technology firm Ant Group.

[Wildreamz]

Mohnish Pabrai reduce Alibaba stake by 78%:
https://www.gurufocus.com/news/1572838/w...ll-alibaba

Mohnish Pabrai (Trades, Portfolio)'s Pabrai Investments reduced its holding in Alibaba Group Holdings (BABA, Financial) by nearly 78% in the third quarter, according to the firm's 13F SEC filing for the period.

Temasek Sells Off Chinese Tech Stocks Amid Crackdown by Beijing
https://www.bloomberg.com/news/articles/...by-beijing

Temasek cut 16% of its stake in e-commerce giant Alibaba and 11% of its shares in ride-hailing service Didi, according to a 13F filing for the three months ended Sept. 30. It exited Chinese search engine operator Baidu Inc., TAL Education Group, New Oriental Education & Technology Group Inc. and jobs service provider Kanzhun Ltd.

[cyclone]

China's Alibaba warns of slowest revenue growth since debut

Reporting by Subrat Patnaik in Bengaluru and Josh Horwitz in Beijing; Editing by Arun Koyyur
November 18, 2021 7:14 PM +07

Nov 18 (Reuters) - China's Alibaba Group Holding Ltd (9988.HK), forecast annual revenue to grow at its slowest pace since its 2014 debut and its second-quarter results missed expectations amid slowing consumption in the country and tighter regulatory scrutiny.

U.S.-listed shares of Alibaba, which expects its fiscal year 2022 revenue to grow by 20% to 23%, were down 3% before the opening bell on Thursday.

The company last week recorded its slowest sales growth during its annual Singles' Day, the world's biggest online shopping fest. read more

China's big tech companies have also been under pressure as the country's regulators clamped down on powerful players from Alibaba to ride-hailing giant Didi Global Inc (DIDI.N), citing antimonopoly and security reasons.

Regulatory crackdown had also hurt Chinese gaming and social media giant Tencent Holdings (0700.HK), which posted its slowest quarterly revenue growth since it went public in 2004. read more

Alibaba's founder Jack Ma has been largely out of public view since criticizing China's regulatory system last year. His empire then faced heavy official scrutiny, which led to the suspension of Ant's $37 billion IPO last November.

For the reported quarter, the e-commerce juggernaut's revenue growth rose 29% to 200.69 billion yuan ($31.44 billion), its slowest rate of growth in six quarters. Analysts on an average had expected revenue of 204.93 billion yuan, according to Refinitiv data.

More details in https://www.reuters.com/business/chinas-...021-11-18/

[Wildreamz]

Cathie is back in Chinese Tech, but not Alibaba/Tencent. Here is why:

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I tend to agree that's the game plan moving forward (buying smaller players in government supported sectors). If I'm the CCP, I will want a more vibrant domestic economy, with many dominant players. Not just one that is dominated by 2 (pseudo) monopolies, that may have too much resource, power, and influence concentrated in too few hands (including significant foreign capital).

More upside potential, and less regulatory risks.

Paradoxically, Alibaba is in many of these "government supported sectors" (Cloud, digitalization, e-commerce, cross-border trade, AI, chip design, logistics etc.); however, right now, perhaps one should be looking at smaller, faster growing, less likely to be scrutinize by CCP, JD and PDD?

(Not directly vested in China; NOT investment advise)

So far (the last 2 to 3 months) this strategy has proven to be somewhat prudent. Based on Alibaba and JD's 2022 guidance (have not seen PDD) I think it's likely to remain that way in the near future.

(not vested; NOT investment advice)

[Wildreamz]

The suspicious disappearance of tennis star Peng Shuai is straight out of China's playbook for forcing rogue celebrities into submission
https://www.businessinsider.com/peng-shu...on-2021-11

*Peng Shuai seemingly vanished after accusing a former Chinese official of sexual assault on Nov. 2.
*It's common for China's elites to disappear after displeasing or criticizing the government.
*This ruthlessness shows that in China, no one is above the law or — more importantly — the Communist Party.

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Since Peng Shuai is an international celebrity and her disappearance has received international attention, I think she will likely resurface after the situation died down. Some others, like Chen Qiushi (https://en.wikipedia.org/wiki/Chen_Qiushi), are less fortunate.

Reminder that the CCP, will always be your most important business partner, especially when you invest in China's largest companies, such as Alibaba.