“Can investors ever learn to love China’s regulators?”
Unlikely but they should!
Investors are overselling China’s tech stocks based on a fundamental misunderstanding of the regulators.
Alibaba’s earnings were mind-blowing! Revenue growth up an incredible 64%, income up 38% and EPS up 12%. The $2.8bn fine hurt!
A historic milestone of 1 bn annual active consumers, showing amazing growth potential.
Still, Baba is getting hammered as investors run from regulators they perceive as “breaking things,” when they are setting-up China’s tech sector for even bigger long-term growth.
Regulator’s are focused on three areas:
- Ensuring that big tech doesn’t buy all of the smaller players to protect innovation. (China watched GAFA in the US and learned.)
- Playing fair.
- Reducing risk. Think Meituan, Didi and Ant
#AntGroup contributed $3.4bn in profit. Meanwhile Ant valuations are simply all over the place ranging from $144-250bn depending on investors’ fear of regulators.
So love regulators?
Maybe not today, but they aren’t “breaking things,” and are long-term positive for the tech sector.
Thanks to CGTN Europe and Juliet Mann who asks great questions!
