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Technology Stocks : Alibaba Group Holding Limited
BABA 170.43-2.0%Oct 31 9:30 AM EDT
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To: greenspirit who wrote (793)1/13/2022 1:41:29 PM
From: Sun Tzu1 Recommendation

Recommended By
greenspirit

   of 882
 
Here's an explanation of how the Chinese VIE works: Message 33659061 Aside from the conflict of control and the contract between the VIE and the operating company, note the risks in the final paragraph that is the reason for DIDI's "voluntary" delisting. There needs to be a two way communication between the VIE and the operating company, but the rules as set between China and the US make it impossible for any company to be compliant with the regulation in both companies. Therefore it is likely that nearly all Chinese VIE companies will exit the US markets within 3 years.

In the specific case of Alibaba, I find it very likely that China will force the enterprise to spin off or restructure its interest in its cloud, AI, and financial segments. Rather than releasing value, such actions are more likely to lock it within the proper China and away from foreign investors.

This is why I say that the Chinese stocks are tradable, but they are not investable. Investment suggests long timeframes and in this case time is not on the side of American investors.
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