[Premium] Dodged the Bullet on Alibaba

I had sold off my Alibaba stake earlier, at about $265. It’s now trading at about $222, a decline of over 16%. What a relief.

The threat to Alibaba is quite serious, and the drop is justified by how much value was destroyed. Ant is likely to go back to just mobile payments, and more lucrative services like insurance and investments will be curtailed. That practically murders Ant. The dominance of Alibaba’s platforms will also be challenged, and its anti-competitive practises stopped. Alibaba is likely to emerge diminished and humbled. And it could be just the start.

I have not had much luck in Chinese investments and lost money on both Tencent and Alibaba. I don’t think I will go into Chinese stocks anymore.

There was a time in the 90s and early 2000s that Chinese companies were flooding the Singapore market. The ones I remember are China Fishery, Cosco, and China Aviation oil. All of them were dogs, and many had fraudulent numbers. Just built on a lot of hype on the sheer size of the China market. I can’t think of a single successful one that was listed on the SGX. A lot of Singaporean investors were suckered into them.

It’s interesting to see sort of the same thing happening in the US markets decades later. The ones in the news are Luckin Coffee, Nio, and XPeng. We know what happened with Luckin. While the electric vehicle stocks have done pretty well, I feel a lot of it was riding on Tesla’s coattails. I wouldn’t go into them, much too risky. There are plenty of other promising companies to invest in, without the threat of fraud or a government trying to crush them.

This is me swearing off Chinese investments. For decades now, I’ve been hearing about the size and growth of the China market. Somehow it has never translated into decent investment gains for me. Even if I go back, I’ll choose an ETF over a single stock. But it won’t happen anytime soon.

2 comments

  1. The last paragraph is so true. Keep hearing about growth in China, etc. It’s just not reliable enough for me to put in a single cent.

    1. Somehow I’ve found it too simplistic.. Big = sure make money. I think the experience of many China investors have been mixed, and many have been burned by regulators or fraud. I think it will happen on the US markets too. Based on personal experience, the Chinese like to dress up their numbers and appear rich. Quite common for them to exaggerate, bordering into fraud. Only established coys like Alibaba and Tencent can be trusted, but they face regulatory risks. Not comfortable for me either to invest.

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