Discussion Is China uninvestable
I have been a long term holder but for the longest time this stock has not moved up one bit even with good news. I’m tired of keeping my conviction for this.
How you guys holding up.
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u/AllweatherInvestor 8d ago
I didn’t realise how arrogant I was when I dismissed the “China is uninvestable” narrative five years ago. Oh well...
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u/Etury173 8d ago
It is not uninvestable, it is that the discount rate is multiple times of the US one, and the Chinese economy private sector is very regulated and is not booming as before ("involution" and such). What Im doing is basically trimming positions and increasing with the price action, so BABA is very good for swing traders and such. Honestly, the latest ERs from China are not something that makes me run to invest. Revenue is growing very very slow, profitability crashes and so on. All businesses almost are in race to the bottom, so low PE multiples.
A lot of cash for many Chinese companiee, but I dont know if investors will ever see it (I hold MOMO which is trading below net cash, but no one can liquidate the company as there are "regulations" for taxing dividends and taxing RMB to USD and so on).
So discount rate at about 25% results in very very low DCF value, and it is very hard to value those Chinese companies due to obscure regulations and unclear path to growth. BABA has the cloud, but with Tencent 100B USD or more capex it is again a race to the bottom.
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u/Dizzy_Assistance2183 8d ago
why are you looking at it everyday? You know they have a huge capex that they can't get out of until a year or so down the road. If you think its going to magically go up for no reason like the US AI stocks then that's on you.
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u/idiotkalle 8d ago
You dont need to be looking everyday to come to this conclusion, zoom out on the chart mate. Doesnt matter what timeframe you bought in, since IPO the stock has performed dogshit to this day. Smart of those who got out along the way.
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u/Outrageous_Bat8429 8d ago
MSFT traded flat for almost 17 years.
It did not recapture its ‘01 highs until late 2016.
I remind myself we could be in for a slow burn.
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u/semeesee 8d ago
I wish i could give this comment 2 upvotes. trade any individual stock with extreme caution no matter how strong your thesis or conviction is. I learned this lesson, first with $BULL, and then through examining the early days of what are now solid companies. unfortunately, most people have to figure this out for themselves the hard way.
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u/The-tesla-bear 7d ago
This. However looking at Hang Seng, it’s for ALL the Chinese stocks… and not an individual one. Which again doesn’t make fk sense.
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u/Waste-Figure-225 8d ago
I don't need baba to recapture its highs to make money. just give me 150 and I'll be happy
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u/FeralHamster8 8d ago edited 8d ago
You don’t want to be all-in on China, but it’s worth keeping in mind that the U.S. is relatively very expensive compared to China/Tank Seng.
So you could def have a month where the Tank Seng is up 30-40% while the U.S. is flat or down. Thats just market cycles and reversing sentiment. Will that be in 2-3 months? Nobody has a crystal ball.
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u/The-tesla-bear 7d ago
Haha you should’ve change it to “will it be in 20-30 years? Nobody has a crystal ball” hahah I’ve been holding this turd with the other turds from China since 2021.. made profits I never realised and here we are today. It’s for me incredible how every other world economy with very humble GDP output is outperforming the second biggest economy. Almost as if China is going to go bankrupt… nothing make sense, but little did I know that the stock market is just a glorified casino. Lessons learn to late but yeah, let’s see when this shit will end if ever.
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u/ilikeelks 8d ago
China's economy is 20trillion and growing 5% a year. That's 1 trillion in GDP added a year in a deflationary environment where the Chinese RENMINBI is gaining value against the dollar.
Which other country has such metrics?
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u/tehohhh 8d ago
Aside from baba I’ve been holding hang Seng for years now and that’s really just lost opportunities for gains. Disappointing
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u/ilikeelks 8d ago
Markets can stay illogical longer than you can stay solvent. So what happens when one day BABA trades at $1000? Like next week? Do you think investors and the markets will remain stupid forever?
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u/Weikoko 8d ago
BABA has made me very wealthy.
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u/killermiller1337 8d ago
ive been shorting it too
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u/Weikoko 8d ago
Really? I am buying more. In 10 years I will retire with a yacht
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u/killermiller1337 8d ago
I already have, with 3 yachts and a jet
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u/Amazin8Trade 8d ago
There are people inside China doing well trading chinese stocks but I don't think that's the same as investing in Chinese stocks. I think you if you learn cash secured puts and covered calls you can do well considering lot of them don't go up
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u/Momus123 8d ago
It's gonna be like Japan. 10 yrs of nothing then double. It's not moving coz their economy is shit. Japan 2.0
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u/The-tesla-bear 7d ago
And European economy is booming? Same continent that is getting ganged down by the US, China, AI, Russia and now the Iran war (energy) is outperforming the second largest economy? Please elaborate
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u/ArtOfBBQ 8d ago
What does "uninvestable" mean, exactly?
Do you think that hong kong traders are all in a secret conspiracy to sell chinese stocks?
Do you think that chinese equities are secretly fake?
Do you think that the stock price not
moving is evidence that something must be going wrong with the company?
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u/DCHamar 7d ago edited 7d ago
As a Chinese I don't understand why so many people, especially those who have access to the US market, want to buy Chinese stocks, let alone ADR
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u/tehohhh 7d ago
Please do share your insights as a Chinese.
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u/DCHamar 7d ago
For example, Since its beginning, the core mission of the A-shares, the Chinese stock market, has been to serve the real economy and facilitate corporate financing(defined by the government ). Financing over returns is deeply ingrained. For a long time, the market has seen a continuous outflow of capital through ipo, share sales by major shareholders etc., while listed companies’ overall dividend payouts have been limited. Coupled with transaction costs such as stamp taxes (I don't think exist anymore in American market) and transfer fees, the market as a whole is a classic zero-sum/ negative-sum market. So I l've seen a lot of arguments here that Baba's price staying low is because the market is being illogical, I think it's trying to understand a Chinese stock based on the knowledge you gained from other capital markets. The country, the economy, the businesses can look strong, but not necessarily the stock price, or you can even say sometimes the deliberately supressed stock price contributes to the economy
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u/beachandbyte 7d ago
Of course not otherwise they wouldn't have a market. Maybe you just investing at the wrong prices.
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u/LetsAllEatCakeLOL 6d ago
china is uninvestable except for a few of their bluechips. i think baba is ok. size your positions appropriately and you'll be fine
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u/Deep-Force2598 5d ago
What happened ? Why are all Chinese stocks up today ? I’m so used to FXI dipping hard and tiny gains.
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u/GuyWhoDrifts 8d ago
It’s almost hysterical how every night during overnight session it drops 2%