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Technology Stocks : Alibaba Group Holding Limited
BABA 170.41-2.0%Oct 31 3:59 PM EST
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To: Glenn Petersen who wrote (801)3/11/2022 1:30:32 PM
From: Sun Tzu  Read Replies (1) of 882
 
The problem for the Chinese big tech is threefold:

The first is securities regulations that the article talked about. The US investors should note that foreign exchanges tend to support much lower valuations (sometimes as much as one-third lower), which is why companies are keen to list on the US markets. In other words, when a company moves out of the US, its stock takes a hit and so do its valuation multiples.

The 2nd problem for BABA and other big Chinese tech is that their growth was based on an anything goes wild west regulatory environment. They would never get away with how they operated if they were in the US or EU. But China let them get away with it in order to build its industry. Now there is no reason for the government to tolerate anticompetitive and anti-privacy behaviours. So they are going to face serious headwinds.

Finally, they have pretty much saturated the Chinese markets and cannot grow there anymore. If they are to grow, they will have to do it outside of China where the operating environment is very different.

All that said, BABA is now at levels that justify taking a chance on it *after* it has built a base and shows some positive momentum.
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