Alibaba Holding Group
are on a five-day recovery wave after Chinese authorities imposed a lower-than-expected fine on food delivery company Meituan and documents that showed value guru Charlie Munger
doubled its stake in the e-commerce giant.
Gains can be an opportunity to sell rather than buy.
Increasingly, some seasoned fund managers are looking to other pockets of the Chinese market for the next stage of growth, as Beijing’s recent crackdown underlines a bigger shift in focus for authorities that could mean much more. weight in business and potential limits to profitability for the big internet giants like
(ticker : BABA).
Shares of Alibaba rose 2.3% on Monday and 18% last week, with many other Chinese tech companies rallying as well. The
KraneShares CSI China Internet ETF
(KWEB) is up nearly 1% to $ 50.58. For those who assessed whether the 45% drop in Alibaba shares over the past year represented a good deal, the disclosure that the publisher Daily Journal, where Munger is chairman and provides investment expertise, had picked up shares in the third quarter likely offered a signal.
In the long run, most senior managers see potential for Alibaba, signaling the weight of the company’s business.
Another positive point was the removal of a layer of uncertainty when the State Administration of Market Regulation released the findings of its antitrust investigation and imposed a fine.
(3690.HongKong) a smaller than expected amount of 3.44 billion RMB, which is 3% of its national income. It is also less than the fine imposed on Alibaba of 4% of turnover.
Regulators explained how Meituan used exclusive sales contracts to strengthen its dominance in the market, which could mean that the impact of abandoning the practice could be greater for Meituan even if the fine is lower. – the biggest move potentially limiting Meituan’s efforts to develop new areas such as calling, hotel reservations, etc., according to a note to clients from Gavekal analyst Ernan Cui.
While the fine potentially alleviates a level of uncertainty, Cui says other areas remain unclear. It is still unclear how the other regulations will be implemented, including the investigation of
(DIDI) by the Chinese Cyber Security Administration. Cui warns regulators could demand significant changes, including business restructuring or even US delisting
Questions also persist about how other data-related regulations can be implemented and whether internet platforms can be categorized as key infrastructure and placed under increased state control, Cui adds.
This makes it more difficult to assess what the business models of these companies will look like and to what extent their profitability could be reduced. It is also more difficult to judge whether more investors will reassess whether they wish to hold these shares in the same way as in the past, especially as Beijing is focused on creating other national champions who can help it. in its strategic competition with the United States
Write to Reshma Kapadia at [email protected]