Alibaba earnings: “Can investors ever learn to love China’s regulators?”

“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:

1. Ensuring that big tech doesn’t buy all of the smaller players to protect innovation. (China watched GAFA in the US and learned.)
2. Playing fair.
3. 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!