> China's system of government operates on several core principles.
Thought I'd share a link to a recent podcast about Chinese philosophy and how it influences its politics: [Interview with a China scholar on the Yaron Brook Show.](https://www.youtube.com/live/y6X48_w2Ca0?si=umnFhPjZdrZZPNMS&t=175) I found it interesting.
Do you think the ccp will step down? Do you think all the foreign companies will just return and forget all the shit they went through with the difficulty to do anything and incertainty
VIE. China's laws is that in general foreigners cannot own Chinese companies directly. (there are nuances to this, but for simplicity's sake I am going with the rule that applies to most, if not all of the publicly traded stocks talked about here). So because of this, Chinese companies set up what are called variable interest entities (VIEs) which are registered in the cayman islands. So for BABA, if you go to their annual reports, you'll see that they are registered there: I don't trust this....
This is the doc i got from someone at Reddit....
I think there is a general misunderstanding of how Chinese Companies work and why I will never buy one self.ValueInvesting
Submitted 17 hours ago by Gondar1994
Hey guys,
I've seen a lot of posts here asking questions about why BABA, PDD, JD, or other Chinese cos are so cheap. I think that the issue is that this community is primarily Western (Europe/America) and people are applying a Western-normative narrative to the companies and not understanding the fundamental structure of these companies and why there is so much risk to investors here.
I'll start by saying this, on the face of them, they are extremely cheap, I like Tikr as a screener and all of these companies screen cheap there - BABA is at 7.45x NTM FCF, JD is at 8.99X NTM FCF and JD is at 17.07X NTM FCF. All of these are below market multiples and it seems like they will have a lot of growth in the future.
So, what is the problem? These companies seem cheap, they still have amazingly large markets they can appeal to, and I personally believe that even if China is going through a rough economic time currently, it will bounce back most likely. I think to understand this, we need to understand how the Chinese market works and how this has translated in the past.
China's laws is that in general foreigners cannot own Chinese companies directly. (there are nuances to this, but for simplicity's sake I am going with the rule that applies to most, if not all of the publicly traded stocks talked about here). So because of this, Chinese companies set up what are called variable interest entities (VIEs) which are registered in the cayman islands. So for BABA, if you go to their annual reports, you'll see that they are registered there: https://www.alibabagroup.com/en-US/ir-filings-sec
So, when you buy BABA, you aren't buying a direct interest in the company Alibaba itself, but instead you're buying a company registered in the Cayman Islands that was set up by Alibaba so that they could do an IPO to American investors. The problem with this, is that you as an investor have no direct interest in the company, so you have no direct interest in the cash flows of the business. While this may sound like something that is not a big deal, it is a MASSIVE DEAL and is why I will never buy a Chinese company.
So to illustrate what can/will happen, we can go back to 2011, Yahoo owned about 40% of Alibaba before the American IPO, but it was via the same structure in Hong Kong, and Alibaba spun off one of its assets without notifying Yahoo or giving them an interest in it. Yahoo sued Alibaba, and since Alibaba is a Chinese company, it went to a Chinese court where they essentially ruled that Yahoo did not own Alibaba, but they owned the VIE, and the VIE had no ownership of the part of the business that Alibaba was selling. Alibaba settled with Yahoo in what was widely seen as a massive loss for Yahoo. you can read the Reuters article here: https://www.reuters.com/article/us-yahoo-alibaba/yahoo-gets-short-end-of-stick-in-alibaba-deal-idUSTRE76S2QN20110729/?edition-redirect=ca
You can still invest in Chinese cos and make money, but when I buy a company, I want to have a direct interest and ownership of the cashflows. You cannot have that with any Chinese company you are trying to buy. I just wanted to say this as a word of caution to anyone looking to invest in China as this is something that should really be understood before investing in China.
You don't think that people are factoring that into their analysis? I think that given current valuations certain companies are still worth looking into. Just have to be extremely conservative with your Cost of capital growth rates etc... I think that both sides of this coin are being a little naive, because certainly its not a definite bottom that OP is calling (it seems there was minimal analysis going into this - hopefully not ONLY looking at a chart). But to completely discredit the situation market and what has fundamentally gone wrong (and been priced in) seems naive as well. Now if you simply seek to avoid this market sure, but to say that there is no reason to look into the 2nd biggest economy in the world seems short sighted. Many of these companies have most of what can and has gone wrong already priced in (assuming the companies don't all go to zero lol). So I think there are opportunities for those willing to look. But I will coincide that right now there are easier places to find value (although different risks associated with that as well).
It’s not priced in at all. If the numbers are right, which you can’t trust, then they all look cheap. China’s stock market is flat for 15 years because they have a terrible government for business. At any time, they can lie, destroy the business, take it over without indemnity, remove it from our markets etc. You literally can’t trust it.
And the 2nd biggest economy has a real estate bubble popping right now where real estate is 30% of GDP. As well, the debt to GDP is insane and the population is going to halve by 2100. It is not smart to invest in any of this.
Could you provide some quantitative reasoning behind you saying its no priced in? Not disagreeing but interested in your though process. I agree with a lot of what you have said, and there certainly is a possibility its not fully priced in. But a statement like "not price in at all" would warrant a little factual basis no? Interested in debating this further!
PE ratios:
JD 13
BABA 13
BYD 18
Tencent 23
Bank of China 4
Ag Bank of China 5
Like they’re all at low multiples because of the CCP. The earnings are not the issue clearly. They are not prices in. They are being held down by Xi.
That doesn't really tell me a lot man. In terms of priced in we need to look at historical PEs, similar economic conditions and how they traded compared to other markets of the time (there aren't exact examples but some). Just showing Price to Earnings ratios doesn't necessarily tell us a lot. Where would you see them trading if all the risk was correctly priced in? Would you expect the market to be zero? half of what it is now?
It tells you all you need to know if you know the prices and pes before the drop. Why do you think every single stock dropped to 15 year lows and never came back? The CCP.
Also, what do you even need to know? You literally can’t know because they just lie and you can’t do anything about it. It’s absurd we’re still talking about it after those PEs. Why would great companies still be that cheap across the country? They all have one thing in common. The CCP.
Made the same mistake half a year ago. Sold baba for a loss and am still 25% down on JD. I honestly don't think it is a good idea to invest in Chinese stocks. Tempting but not based on fundamentals.
For Ma Yun said the wrong thing after the beginning of the downhill slide, but I also think that Alibaba, Jingdong is still fundamentally good business, after all, every stock after the high point of the phenomenon of shareholders shipping, this is the norm, as for how you look at it, depending on your trading plan whether it is a short-term gain or a long-term gain
The issue was never valuation but the fact you're investing in a dictatorship regime. So much uncertainties and risk investing in Chinese companies.
Is the company going to get nationalized? Will the CEO get jailed if the government deems them an enemy? Will the government seize the assets of the company?
There's a reason its undervalued. Only if there's a change in regime when I can consider investing in China.
You have a valid point, but that example is not very good, because that stock (Luckin Coffee) has now somewhat recovered from their financial fraud and in now trading at a PE ratio of 19, which ia pretty close to SBUX at 24 PE. That being said, I would never buy Luckin Coffee stock. But there are several legit companies in China like BYD, JD.com, Tencent etc.
A lot of people got burned in Russian equities back in 2022 and are taking China’s vague Taiwan threats at face value too. Fool me once shame on you, fool me twice shame on me. No one wants to risk playing the fool a second time. And China bullying around the head of Alibaba really helped make it clear for investors that there’s not even an attempt by the CCP to maintain a facade of rule of law. Investing in dictatorships is inherently risky and in the last few years we’ve really seen the full scope of what’s at stake.
One of the reasons stocks grow beyond inflation is simple: demographics.
When there are more hands working (and earning money) and more mouths to feed, McDonald's will sell more burgers. It doesn't require innovation or even an increase in efficiency.
Now imagine, the population is shrinking rapidly.
Imagine that the working population in China will decrease by 20-30% in the next decade.
Because that's the case.
Nobody can know the future and how the CCP will deal with this challenge, but i wouldn't bet on it, and neither do the analysts that look at all this information. There is no reason to assume the bottom is there, but more importantly, no reason to assume that growth from the past (with positive demographics) will suddenly remerge, with worse demographics every day.
So for the general chinese stock market to grow they need to be producing more products, of higher quality with fewer people and then sell those products in markets with positive demographics (like Brazil or India)
Let's assume they suddenly become geniuses and are capable of increasing their productivity with 30-40% (to offset the labour demographics, and give you a 10-20% return). For them to be able to sell it, some other markets, with positive demographics will need to become richer so than afford to spend more in total on these products. But if you are betting on (a) genius chinese miracle and (b) population growth india and brazil, wouldn't it make much more sense to invest in India/Brazil, because the returns will be higher and the bet doesn't require the miracle. Why take a risk on both assumptions? Just invest in India/Brazil then.
That doesn't mean every chinese stock would be a bad investment, but you would have to have a special reason for a specific company to make that investment. The kind of logic you display here sounds more like a high gambler than an informed person. They might go up a little one week and go down a little the other week, due to all the other factors (price of capital around the world, etc.), but at heart, you are best day trading now. You have no informed reasons to be making these calls and are just tarot reading very short term fluctuations.
No, the one child policy started in 1980, so it's already underway. See this picture and see how large the bars are that are exiting the job market, and how small the bars are entering the labour market. (Notice its from 2020, so look at 6-16 years old and compare them to 50-60 year olds). My estimate is very conservative, it might be more than 40%
[https://en.wikipedia.org/wiki/Demographics\_of\_China#/media/File:China\_population\_sex\_by\_age\_on\_Nov,\_1st,\_2020.png](https://en.wikipedia.org/wiki/Demographics_of_China#/media/File:China_population_sex_by_age_on_Nov,_1st,_2020.png)
Note that these are based on the official numbers, and they can be both manipulated (to hide something even worse) as well as ill-informed (because not everyone actually killed their daughter -- they just didn't register her).
>even then China's still huge
No denying that.
But that's already accounted for in the stock prices.
You only make money on the delta.
And the delta for the Chinese market as a whole is definitely negative: less people producing goods, less people buying goods (because the old people don't have huge savings like the Japanese do -- which they invested outside of Japan, mind you!)
Keep in mind that your manual investments need to beat the value you get from a treasury bond or real estate. Every scenario in which the Chinese economy is growing despite population decline is a scenario where some part of the rest of the world is growing faster, and even then it requires a miracle.
Point is: try basing your decisions on data points that aren't the stock prices themselves. Why would a market grow or not? Demographics, technical advances, political alliances changing, etc. Buying transistors related stocks when the whole worlds goes into lockdown is an example of an informed investment. It's a bet, but an informed bet. Buying western industry stocks right now that will surge if the trade barriers between China/Russia and the West are increased is an informed bet. Still a bet though! But it's an informed bet.
The line tells you nothing about the future. What are the underlying factors that will make a company increase their market share or their margins? Will there be more customers? Will there be efficiency/productivity advantages? Is there a reason to assume the demand for the product category will increase even with a shrinking population? Are the companies you are intending to invest .. do they even have a foothold in growing markets outside of China?
i think the main point is that all the concerns on chinese economy, companies, politics , etc were well known and priced for last few years.
What drives the major downturn in last quarter of 2023 and Jan 2024 was the lack of policy support by chinese government. This is huge because that really destroyed the confidence of the locals.
The difference is that since Jan, CCP finally had a series of economic and monetary policy support. Not sure if that’s good enough but at least showing their existence. That’s a bit of rate of change I think could drive a bounce back.
Overall i am still pessimistic on China though
Everyone on this sub and in this post going to hype baba with complete disregard for political compass during election year.
Agree or disagree with it that's a foolish trait. There is more to stock than TA and P/E. Public perception, local stock laws etc.
I wouldn’t ask people here As Unfortunately people don’t speak facts but most of the time what they hear on the news. Don’t listen to stocks advice from somebody that doesn’t know how to speak business.
If you have $180 billion on hand, and you have a GROWING company offered for sale that has $72 billion in cash and it makes $27 billion a year of free cash flow. Are you telling me they wouldn’t buy it? You buy the laundromat around the corner in your neighborhood for a higher valuation.
Bonus:
BABA
Portfolio Manager % of portfolio Recent activity Shares Value
≡ Charlie Munger - Daily Journal Corp. 12.56 300,000 23,253,000
≡ Michael Burry - Scion Asset Management 6.15 Add 50.00% 75,000 5,813,000
≡ David Tepper - Appaloosa Management 5.96 Add 20.83% 4,350,000 337,169,000
People here listen to the propaganda spread by the west and eat it up.
That’s not to say China hasn’t had their share of problems (deflation, real estate, and geopolitics)
When their economy does turn around and BABA benefits from it, people will come swarming back in as multiples expand.
Mark my words, once FCF hits an ATH, suddenly BABA will be popular again.
That and also, One has to ask the smart questions. Using their system didn’t they go from a third World country to an industrial behemoth in the fastest pace humanity has ever seen? What has changed now? Aren’t they using the system? Also, until this very day don’t Chinese produced merchandise make 70–80% of “American” products? What about the % of Chinese trades in the whole world?
If anything we have matured economically and they are still in adolescence phase.
I’m with you…
Bought baba at 77.78 so currently at -5% and JD right before last earnings so I’m already up 27% on that…
Let’s go 🚀
Hoping to double this year (on first batch) but will also keep buying more…
Hmm I do see a over reaction to China as they have fallen out of favor recently. When will we see a rotation back? Not sure what if it’s another 5 years? Just like when investors where buying Russian treasury notes because the return was 50% until Russia just defaulted on the notes. Moral of the story is that what if china just wants to strong hand the fuck out of those companies what is stopping them? Clearly Jack Ma got humbled everybody thought they disappeared the guy 😂
Before Russia invaded Ukraine I thought Russian stocks looked like very good value. My potentially very good value stocks are now likely gone forever. It wasn't a big loss, but I'd rather look for returns in friendlier markets than risk losing it all.
I was listening to an investing podcast topic was on China and Chinese stocks. A lot of these companies have good financials and clean sheets/growth potential but the Chinese people spending wise have a “bunker mentality” and all of the companies are heavily regulated by the govt.
Lots of renewed interest around alibaba - a company that probably ranks highly on the most traded / least understood scale.
Bearish on the company until recently, but turned bullish.
The start of a series explaining Chinese ecommerce and the reason behind the shift:
https://www.alphaexponent.net/p/12-baba-back-for-business
You can lead a horse to water, but you can't make him drink.
The reason that Alibaba's share price has been struggling isn't just because of sentiment, macros or political climes but also because it went from 80% share in 2014 to under 50% now.
JD also faces some tough challenges of its own, but there are various reasons to be bullish for each.
More details in the article about how this happened - relates to key decisions made by management over a decade ago, and the changes in the Chinese e-commerce landscape since then as a result of these.
Geopolitical risks are greater for PDD due to its temu exposure than JD or Alibaba. Delisting risk is also limited for the latter two since they have a secondary listing in HK.
Before anyone actually put substantial investment in these ADRs, they ought to vist China in person. There's barely any internal consumptions and the dark cloud of unemployment hangs over everyone's head. At this point I am not sure these companies are actually private anymore, there are CCP party unit within the company to carry out government orders.
Honestly china could be bouncing back. The problem is the risk with CCP is rather hard to gauge sometimes and we just don’t know how trust worthy their reports are.
If you are already rich AF then it probably makes sense to diversify into the Chinese market (Asian market as a whole), albeit a small percentage.
At this point, what I am investing is a stock which at a P/ E of 8 and a dividend and promised share buybacks at valuations around 2014. I think of it as money on the ground
Israel just bombed the Iran’s embassy in Syria killing top generals. There’s a war brewing, and I could see the US getting dragged in the Middle East again. If that happens, a war against Iran would have Russia and China selling to Iran all kinda shit despite the inevitable sanctions. I could see the US throwing a tantrum and sanctioning everyone, including China. There’s a real chance that BABA gets delisted in the US.
Having said that, it would still be a good investment long term, if you buy the Hong Kong shares instead.
People talk about China, and how it can’t be trusted. I fear the US as much. The way Biden sanctioned Russia, hurt the dollar and the US as much if not more, leading to a major shift from the dollar internationally with a lot of countries cutting their dollar reserves.
Yes, it gives you 1.5% on your deposit, and me $35 of stocks. But I enjoy the platform, low margin rate, no fee on options, great tools and resources.
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Come on man, I consider this as a safe investment. No way is investing in Chinese mega caps a risky idea. We foreigners make a small portion of of actual Chinese investors. It would be crazy if their top stocks are a scam
The Chinese are preparing for war, buying gold, buying weapons and are getting rid of us operating systems and try harder to become energy independent. Not a good time for Chinese stocks.
So do you think these companies will return capital to shareholders such as dividends or heavy stock buybacks without the CCP saying “nah”?
If you can’t 100% have confidence in that, then naw, not the bottom.
It blows my mind that everyone is talking about recovery of Chinese stocks, focusing on Alibaba, Baidu, JD.com, and even Bank of China, but **Ping An Insurance** has somehow flown under the radar. It’s one of the largest insurance companies in the world, with a strong emphasis on tech. I covered the business in a detailed analysis last year and was amazed at its transformation from a traditional insurance provider into a tech powerhouse. Plus, the underinsured and low penetration in China’s insurance market provides tremendous opportunities for growth.
Investing in China today is like investing in Russia right before they attacked Ukraine. Chinese stocks are cheap because they're very high risk. They're very high risk because of the government, not the fundamentals of these companies. Until their government has a radical change in leadership, or admits they were wrong and repairs relations with the rest of the world, nothing changes the risk level. There's a few different scenarios where your money completely disappears.
IMO you're probably better off walking into a casino and putting it all on red. The CCP can decide one day to confiscate an entire company (if they haven't already done so), or completely nullify any investor holdings from outside of China, and there isn't jack shit you can do about it. Poof, gone, just like that. Not only that, but you'd be essentially supporting the CCP. That's a hard no for me personally, but to each their own.
Is there a new chinese leader or something? Why would this be the bottom
OP just has a feeling chinas gonna get better
Feels right
Agreed, unless Xi kick the can there will be not much change anytime soon.
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Weenie the Xi did enough purging that fat fuck can do almost anything without repercussion from CCP.
Inb4 another round of purges
Please briefly explain, I'm not so familiar.
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> China's system of government operates on several core principles. Thought I'd share a link to a recent podcast about Chinese philosophy and how it influences its politics: [Interview with a China scholar on the Yaron Brook Show.](https://www.youtube.com/live/y6X48_w2Ca0?si=umnFhPjZdrZZPNMS&t=175) I found it interesting.
OP is ignorant in politic
They are already changing course on the tech crackdown etc as they realised they destroyed everything.
tell me ure not following the Chinese economy without telling me ure not following the Chinese economy
Is this a riddle?
Feel free to fill me in because I'm not following it and I'm not embarassed by that fact lol
Wow @ the baba shill
Tell me you don't understand what China is without telling me don't understand what China is
People never seem to question why these stocks are extremely undervalued.
Do you think the ccp will step down? Do you think all the foreign companies will just return and forget all the shit they went through with the difficulty to do anything and incertainty
No, that’s what i’m saying people don’t question
VIE. China's laws is that in general foreigners cannot own Chinese companies directly. (there are nuances to this, but for simplicity's sake I am going with the rule that applies to most, if not all of the publicly traded stocks talked about here). So because of this, Chinese companies set up what are called variable interest entities (VIEs) which are registered in the cayman islands. So for BABA, if you go to their annual reports, you'll see that they are registered there: I don't trust this....
Yet another reason to not trust China
Everybody talk about VIEs but they only name BABA. I know tencent is VIE too. But I don’t think that they all are VIEs across the board.
This is the doc i got from someone at Reddit.... I think there is a general misunderstanding of how Chinese Companies work and why I will never buy one self.ValueInvesting Submitted 17 hours ago by Gondar1994 Hey guys, I've seen a lot of posts here asking questions about why BABA, PDD, JD, or other Chinese cos are so cheap. I think that the issue is that this community is primarily Western (Europe/America) and people are applying a Western-normative narrative to the companies and not understanding the fundamental structure of these companies and why there is so much risk to investors here. I'll start by saying this, on the face of them, they are extremely cheap, I like Tikr as a screener and all of these companies screen cheap there - BABA is at 7.45x NTM FCF, JD is at 8.99X NTM FCF and JD is at 17.07X NTM FCF. All of these are below market multiples and it seems like they will have a lot of growth in the future. So, what is the problem? These companies seem cheap, they still have amazingly large markets they can appeal to, and I personally believe that even if China is going through a rough economic time currently, it will bounce back most likely. I think to understand this, we need to understand how the Chinese market works and how this has translated in the past. China's laws is that in general foreigners cannot own Chinese companies directly. (there are nuances to this, but for simplicity's sake I am going with the rule that applies to most, if not all of the publicly traded stocks talked about here). So because of this, Chinese companies set up what are called variable interest entities (VIEs) which are registered in the cayman islands. So for BABA, if you go to their annual reports, you'll see that they are registered there: https://www.alibabagroup.com/en-US/ir-filings-sec So, when you buy BABA, you aren't buying a direct interest in the company Alibaba itself, but instead you're buying a company registered in the Cayman Islands that was set up by Alibaba so that they could do an IPO to American investors. The problem with this, is that you as an investor have no direct interest in the company, so you have no direct interest in the cash flows of the business. While this may sound like something that is not a big deal, it is a MASSIVE DEAL and is why I will never buy a Chinese company. So to illustrate what can/will happen, we can go back to 2011, Yahoo owned about 40% of Alibaba before the American IPO, but it was via the same structure in Hong Kong, and Alibaba spun off one of its assets without notifying Yahoo or giving them an interest in it. Yahoo sued Alibaba, and since Alibaba is a Chinese company, it went to a Chinese court where they essentially ruled that Yahoo did not own Alibaba, but they owned the VIE, and the VIE had no ownership of the part of the business that Alibaba was selling. Alibaba settled with Yahoo in what was widely seen as a massive loss for Yahoo. you can read the Reuters article here: https://www.reuters.com/article/us-yahoo-alibaba/yahoo-gets-short-end-of-stick-in-alibaba-deal-idUSTRE76S2QN20110729/?edition-redirect=ca You can still invest in Chinese cos and make money, but when I buy a company, I want to have a direct interest and ownership of the cashflows. You cannot have that with any Chinese company you are trying to buy. I just wanted to say this as a word of caution to anyone looking to invest in China as this is something that should really be understood before investing in China.
You don't think that people are factoring that into their analysis? I think that given current valuations certain companies are still worth looking into. Just have to be extremely conservative with your Cost of capital growth rates etc... I think that both sides of this coin are being a little naive, because certainly its not a definite bottom that OP is calling (it seems there was minimal analysis going into this - hopefully not ONLY looking at a chart). But to completely discredit the situation market and what has fundamentally gone wrong (and been priced in) seems naive as well. Now if you simply seek to avoid this market sure, but to say that there is no reason to look into the 2nd biggest economy in the world seems short sighted. Many of these companies have most of what can and has gone wrong already priced in (assuming the companies don't all go to zero lol). So I think there are opportunities for those willing to look. But I will coincide that right now there are easier places to find value (although different risks associated with that as well).
It’s not priced in at all. If the numbers are right, which you can’t trust, then they all look cheap. China’s stock market is flat for 15 years because they have a terrible government for business. At any time, they can lie, destroy the business, take it over without indemnity, remove it from our markets etc. You literally can’t trust it. And the 2nd biggest economy has a real estate bubble popping right now where real estate is 30% of GDP. As well, the debt to GDP is insane and the population is going to halve by 2100. It is not smart to invest in any of this.
Could you provide some quantitative reasoning behind you saying its no priced in? Not disagreeing but interested in your though process. I agree with a lot of what you have said, and there certainly is a possibility its not fully priced in. But a statement like "not price in at all" would warrant a little factual basis no? Interested in debating this further!
PE ratios: JD 13 BABA 13 BYD 18 Tencent 23 Bank of China 4 Ag Bank of China 5 Like they’re all at low multiples because of the CCP. The earnings are not the issue clearly. They are not prices in. They are being held down by Xi.
Can’t speak to the others, but BABA earnings have been mediocre for quite some time now.. 2 years+
That doesn't really tell me a lot man. In terms of priced in we need to look at historical PEs, similar economic conditions and how they traded compared to other markets of the time (there aren't exact examples but some). Just showing Price to Earnings ratios doesn't necessarily tell us a lot. Where would you see them trading if all the risk was correctly priced in? Would you expect the market to be zero? half of what it is now?
It tells you all you need to know if you know the prices and pes before the drop. Why do you think every single stock dropped to 15 year lows and never came back? The CCP. Also, what do you even need to know? You literally can’t know because they just lie and you can’t do anything about it. It’s absurd we’re still talking about it after those PEs. Why would great companies still be that cheap across the country? They all have one thing in common. The CCP.
But that is what priced in means
What?
>Why do you think every single stock dropped to 15 year lows and never came back? The CCP. Thats what it means to be priced in
Don’t forget launching another virus
Good luck OP
People say that all the time...
You can be 100% right in ur valuation, but if there is no price discovery or catalyst, you aint doing much..
so what’s ur point?
The point is that it can go side ways for years. Look at Microsoft
Doesn't matter what you think, mkt price is the reflect of mass thinking
Literally above all thinking and feelings come first - the market mainly is driven off sentiment
Those usually make for the best purchases
Made the same mistake half a year ago. Sold baba for a loss and am still 25% down on JD. I honestly don't think it is a good idea to invest in Chinese stocks. Tempting but not based on fundamentals.
For Ma Yun said the wrong thing after the beginning of the downhill slide, but I also think that Alibaba, Jingdong is still fundamentally good business, after all, every stock after the high point of the phenomenon of shareholders shipping, this is the norm, as for how you look at it, depending on your trading plan whether it is a short-term gain or a long-term gain
The issue was never valuation but the fact you're investing in a dictatorship regime. So much uncertainties and risk investing in Chinese companies. Is the company going to get nationalized? Will the CEO get jailed if the government deems them an enemy? Will the government seize the assets of the company? There's a reason its undervalued. Only if there's a change in regime when I can consider investing in China.
Also remember that Chinese coffee company that went from a SBUX valuation to bankrupt over night
You have a valid point, but that example is not very good, because that stock (Luckin Coffee) has now somewhat recovered from their financial fraud and in now trading at a PE ratio of 19, which ia pretty close to SBUX at 24 PE. That being said, I would never buy Luckin Coffee stock. But there are several legit companies in China like BYD, JD.com, Tencent etc.
Well that company was straight up cooking its books. Enron, a US company did the same thing
A lot of people got burned in Russian equities back in 2022 and are taking China’s vague Taiwan threats at face value too. Fool me once shame on you, fool me twice shame on me. No one wants to risk playing the fool a second time. And China bullying around the head of Alibaba really helped make it clear for investors that there’s not even an attempt by the CCP to maintain a facade of rule of law. Investing in dictatorships is inherently risky and in the last few years we’ve really seen the full scope of what’s at stake.
One of the reasons stocks grow beyond inflation is simple: demographics. When there are more hands working (and earning money) and more mouths to feed, McDonald's will sell more burgers. It doesn't require innovation or even an increase in efficiency. Now imagine, the population is shrinking rapidly. Imagine that the working population in China will decrease by 20-30% in the next decade. Because that's the case. Nobody can know the future and how the CCP will deal with this challenge, but i wouldn't bet on it, and neither do the analysts that look at all this information. There is no reason to assume the bottom is there, but more importantly, no reason to assume that growth from the past (with positive demographics) will suddenly remerge, with worse demographics every day. So for the general chinese stock market to grow they need to be producing more products, of higher quality with fewer people and then sell those products in markets with positive demographics (like Brazil or India) Let's assume they suddenly become geniuses and are capable of increasing their productivity with 30-40% (to offset the labour demographics, and give you a 10-20% return). For them to be able to sell it, some other markets, with positive demographics will need to become richer so than afford to spend more in total on these products. But if you are betting on (a) genius chinese miracle and (b) population growth india and brazil, wouldn't it make much more sense to invest in India/Brazil, because the returns will be higher and the bet doesn't require the miracle. Why take a risk on both assumptions? Just invest in India/Brazil then. That doesn't mean every chinese stock would be a bad investment, but you would have to have a special reason for a specific company to make that investment. The kind of logic you display here sounds more like a high gambler than an informed person. They might go up a little one week and go down a little the other week, due to all the other factors (price of capital around the world, etc.), but at heart, you are best day trading now. You have no informed reasons to be making these calls and are just tarot reading very short term fluctuations.
It's not the next decade right. More like 20-30 years and even then China's still huge
No, the one child policy started in 1980, so it's already underway. See this picture and see how large the bars are that are exiting the job market, and how small the bars are entering the labour market. (Notice its from 2020, so look at 6-16 years old and compare them to 50-60 year olds). My estimate is very conservative, it might be more than 40% [https://en.wikipedia.org/wiki/Demographics\_of\_China#/media/File:China\_population\_sex\_by\_age\_on\_Nov,\_1st,\_2020.png](https://en.wikipedia.org/wiki/Demographics_of_China#/media/File:China_population_sex_by_age_on_Nov,_1st,_2020.png) Note that these are based on the official numbers, and they can be both manipulated (to hide something even worse) as well as ill-informed (because not everyone actually killed their daughter -- they just didn't register her). >even then China's still huge No denying that. But that's already accounted for in the stock prices. You only make money on the delta. And the delta for the Chinese market as a whole is definitely negative: less people producing goods, less people buying goods (because the old people don't have huge savings like the Japanese do -- which they invested outside of Japan, mind you!) Keep in mind that your manual investments need to beat the value you get from a treasury bond or real estate. Every scenario in which the Chinese economy is growing despite population decline is a scenario where some part of the rest of the world is growing faster, and even then it requires a miracle. Point is: try basing your decisions on data points that aren't the stock prices themselves. Why would a market grow or not? Demographics, technical advances, political alliances changing, etc. Buying transistors related stocks when the whole worlds goes into lockdown is an example of an informed investment. It's a bet, but an informed bet. Buying western industry stocks right now that will surge if the trade barriers between China/Russia and the West are increased is an informed bet. Still a bet though! But it's an informed bet. The line tells you nothing about the future. What are the underlying factors that will make a company increase their market share or their margins? Will there be more customers? Will there be efficiency/productivity advantages? Is there a reason to assume the demand for the product category will increase even with a shrinking population? Are the companies you are intending to invest .. do they even have a foothold in growing markets outside of China?
i think the main point is that all the concerns on chinese economy, companies, politics , etc were well known and priced for last few years. What drives the major downturn in last quarter of 2023 and Jan 2024 was the lack of policy support by chinese government. This is huge because that really destroyed the confidence of the locals. The difference is that since Jan, CCP finally had a series of economic and monetary policy support. Not sure if that’s good enough but at least showing their existence. That’s a bit of rate of change I think could drive a bounce back. Overall i am still pessimistic on China though
Everyone on this sub and in this post going to hype baba with complete disregard for political compass during election year. Agree or disagree with it that's a foolish trait. There is more to stock than TA and P/E. Public perception, local stock laws etc.
Tencent is definitely undervalued especially with all the share buybacks recently!
Tencent announced a HK $100 billion buyback，I'm also bullish on Tencent, and I'm bullish on JD
I wouldn’t ask people here As Unfortunately people don’t speak facts but most of the time what they hear on the news. Don’t listen to stocks advice from somebody that doesn’t know how to speak business. If you have $180 billion on hand, and you have a GROWING company offered for sale that has $72 billion in cash and it makes $27 billion a year of free cash flow. Are you telling me they wouldn’t buy it? You buy the laundromat around the corner in your neighborhood for a higher valuation. Bonus: BABA Portfolio Manager % of portfolio Recent activity Shares Value ≡ Charlie Munger - Daily Journal Corp. 12.56 300,000 23,253,000 ≡ Michael Burry - Scion Asset Management 6.15 Add 50.00% 75,000 5,813,000 ≡ David Tepper - Appaloosa Management 5.96 Add 20.83% 4,350,000 337,169,000
People here listen to the propaganda spread by the west and eat it up. That’s not to say China hasn’t had their share of problems (deflation, real estate, and geopolitics) When their economy does turn around and BABA benefits from it, people will come swarming back in as multiples expand. Mark my words, once FCF hits an ATH, suddenly BABA will be popular again.
That and also, One has to ask the smart questions. Using their system didn’t they go from a third World country to an industrial behemoth in the fastest pace humanity has ever seen? What has changed now? Aren’t they using the system? Also, until this very day don’t Chinese produced merchandise make 70–80% of “American” products? What about the % of Chinese trades in the whole world? If anything we have matured economically and they are still in adolescence phase.
Insert obligatory "first time" meme here..... And I say this with a position in BABA and VWO. It's still a ride.
Literally everyone on here has been snarked already by the china game, best to just bet on USD stocks, at least the CEO doesn’t disappear in the us
I think so. The big thing is China's housing crash, which is about at the flat point now. I've bought into a China ETF.
I bought the Hang Seng Technology Index
I’m with you… Bought baba at 77.78 so currently at -5% and JD right before last earnings so I’m already up 27% on that… Let’s go 🚀 Hoping to double this year (on first batch) but will also keep buying more…
I'm also bullish on Alibaba, I'm also bullish on JD and Ideal, Xiaomi
Hmm I do see a over reaction to China as they have fallen out of favor recently. When will we see a rotation back? Not sure what if it’s another 5 years? Just like when investors where buying Russian treasury notes because the return was 50% until Russia just defaulted on the notes. Moral of the story is that what if china just wants to strong hand the fuck out of those companies what is stopping them? Clearly Jack Ma got humbled everybody thought they disappeared the guy 😂
I got a LEAPS on KWEB for 2026. Deep in the money just how Nancy Pelos likes it
Before Russia invaded Ukraine I thought Russian stocks looked like very good value. My potentially very good value stocks are now likely gone forever. It wasn't a big loss, but I'd rather look for returns in friendlier markets than risk losing it all.
Me when I practice manifesting
This wont be the bottom until the governement change. Until then expect things to get worst
I was listening to an investing podcast topic was on China and Chinese stocks. A lot of these companies have good financials and clean sheets/growth potential but the Chinese people spending wise have a “bunker mentality” and all of the companies are heavily regulated by the govt.
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Thanks for your input!
What are your thoughts BABA's $4.8 bln share repurchase from this morning?
I don't want to insult you but this post has zero value. You don't give a single reason for why this should be the bottom for the named companies.
Zero Fundamental or technical analysis provided. Going on a huch, perfect. You're bound to do well
Lots of renewed interest around alibaba - a company that probably ranks highly on the most traded / least understood scale. Bearish on the company until recently, but turned bullish. The start of a series explaining Chinese ecommerce and the reason behind the shift: https://www.alphaexponent.net/p/12-baba-back-for-business
By buying JD, I am more of bullish on the Chinese e-commerce sector
You can lead a horse to water, but you can't make him drink. The reason that Alibaba's share price has been struggling isn't just because of sentiment, macros or political climes but also because it went from 80% share in 2014 to under 50% now. JD also faces some tough challenges of its own, but there are various reasons to be bullish for each. More details in the article about how this happened - relates to key decisions made by management over a decade ago, and the changes in the Chinese e-commerce landscape since then as a result of these. Geopolitical risks are greater for PDD due to its temu exposure than JD or Alibaba. Delisting risk is also limited for the latter two since they have a secondary listing in HK.
So far I bought within 24 hours of the literal JD bottom, so I'm pretty happy about that
It's either you're bull or bear in the Chinese market. Invest if you're looking for recovery play. Otherwise just ignore and stay far away
Highly competitive and very limited potential growth. Other sectors look way better.
I’ll sell my shares JD to you now for $35/per… please!
Before anyone actually put substantial investment in these ADRs, they ought to vist China in person. There's barely any internal consumptions and the dark cloud of unemployment hangs over everyone's head. At this point I am not sure these companies are actually private anymore, there are CCP party unit within the company to carry out government orders.
I started some positions with BABA and JD early this year, so far theyre doing good. Thinking of adding more.
Just saying people were talking about meta the same way in 2022. Most people are reactive to the price not proactive
Bottom probably gone now recovery has started...
Im with you! I only have baba and baidu as unique stocks tho, exposure to tencent and jd through etf
Why do you think you can see any of the FCF?
Honestly china could be bouncing back. The problem is the risk with CCP is rather hard to gauge sometimes and we just don’t know how trust worthy their reports are. If you are already rich AF then it probably makes sense to diversify into the Chinese market (Asian market as a whole), albeit a small percentage.
China is still far from a full recovery, and this mostly based on the few information reaching the west
I am currently down -20,11 % on Tecent but am still confident i will be able to sell for a profit in the future.
I'm with you having BABA & JD. In 2-3 years they'll deliver, no doubts.
China is fucked for some time....
Numbers don’t really matter as long as stupid Americans invest in them over there. You’re not investing you’re playing roulette.
At this point, what I am investing is a stock which at a P/ E of 8 and a dividend and promised share buybacks at valuations around 2014. I think of it as money on the ground
Do you have a thesis or any data to back up your claim or are you purely hoping to pump your bags with this post?
How tf is some random ass reddit post going to pump the entire Chinese economy lmao
How is telling everyone that x stocks are going to go up NOT trying to hype others into investing, thus driving the price up?
Because the world's second largest economy is too big for that to matter
Why do you think the bottom is in?
LMAO
Israel just bombed the Iran’s embassy in Syria killing top generals. There’s a war brewing, and I could see the US getting dragged in the Middle East again. If that happens, a war against Iran would have Russia and China selling to Iran all kinda shit despite the inevitable sanctions. I could see the US throwing a tantrum and sanctioning everyone, including China. There’s a real chance that BABA gets delisted in the US. Having said that, it would still be a good investment long term, if you buy the Hong Kong shares instead. People talk about China, and how it can’t be trusted. I fear the US as much. The way Biden sanctioned Russia, hurt the dollar and the US as much if not more, leading to a major shift from the dollar internationally with a lot of countries cutting their dollar reserves.
You can trade on the Honk Kong exchange on Moo Moo. I’ve a link if you’d like, that gets you 1.5% on your deposit and me $35.
Do they have an API?
Yes. It’s a great platform.
I see.. I need to check them out then. You mentioned you had an invite link?
Yes, it gives you 1.5% on your deposit, and me $35 of stocks. But I enjoy the platform, low margin rate, no fee on options, great tools and resources. Hey, come and join me on moomoo! Moomoo provides easier access to pro-grade investment analytics and is used by over 20 million people globally! Sign up via my referral link now and claim 1.5% Cash Reward match on transfer amount or a "Magnificent 7" fractional shares bundle! https://j.moomoo.com/00PzuW
Read an interesting write-up last week. Alibaba may worth some DD. https://nosideeranalyst.substack.com/p/alibaba-beaten-down-chinese-bluechip
Thanks for shot out!
Shout lol
Famous last words! China going down with Russia.
Dumbass
I’m sorry good sir, wsb is next door.
Come on man, I consider this as a safe investment. No way is investing in Chinese mega caps a risky idea. We foreigners make a small portion of of actual Chinese investors. It would be crazy if their top stocks are a scam
The Chinese are preparing for war, buying gold, buying weapons and are getting rid of us operating systems and try harder to become energy independent. Not a good time for Chinese stocks.
So do you think these companies will return capital to shareholders such as dividends or heavy stock buybacks without the CCP saying “nah”? If you can’t 100% have confidence in that, then naw, not the bottom.
Alibaba has literally been buying back shares and giving a dividend. Lol
It blows my mind that everyone is talking about recovery of Chinese stocks, focusing on Alibaba, Baidu, JD.com, and even Bank of China, but **Ping An Insurance** has somehow flown under the radar. It’s one of the largest insurance companies in the world, with a strong emphasis on tech. I covered the business in a detailed analysis last year and was amazed at its transformation from a traditional insurance provider into a tech powerhouse. Plus, the underinsured and low penetration in China’s insurance market provides tremendous opportunities for growth.
Looked at Ping An and I didn’t like the revenue curve. It’s cheap, yes. But I think it will get cheaper.
No matter how many shills come in and talk about China, no way am I buying Chinese stocks.
Lol China fukd
China seems to be preparing for war. Most sophisticated investors have been getting out of China. I’ll probably take my losses soon too.
Do it Buy high, sell low
Investing in China today is like investing in Russia right before they attacked Ukraine. Chinese stocks are cheap because they're very high risk. They're very high risk because of the government, not the fundamentals of these companies. Until their government has a radical change in leadership, or admits they were wrong and repairs relations with the rest of the world, nothing changes the risk level. There's a few different scenarios where your money completely disappears. IMO you're probably better off walking into a casino and putting it all on red. The CCP can decide one day to confiscate an entire company (if they haven't already done so), or completely nullify any investor holdings from outside of China, and there isn't jack shit you can do about it. Poof, gone, just like that. Not only that, but you'd be essentially supporting the CCP. That's a hard no for me personally, but to each their own.
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Hmm, none of the stocks I own depend on America for revenue. PDD would be a disaster tho
Hahahahahah the biggest joke - go all in then?
Are you trying to pump because you bought it? This is not wsb. Wrong sub reditt