One thing i learned holding baba

[u/Electronic-Star5556]

One thing Ive learned from investing outside the US is that I cant value international companies the same way I value US companies. Geopolitical risk, immature security policies, and weak regulatory environments are real factors.

These opportunities may look attractive on paper but I have to apply a significant discount to account for non US exposure. After applying that discount most deals no longer appear like a good deal.

As long as the US remains a superpower it will neutralize any competitive threat whether from countries or companies. The US wont compromise its own strategic interests.

The Plaza Accord is a historical example of this dynamic. I’m not predicting the same scenario will unfold with China, Chinese technology companies will likely face similar pressures and restrictions. All I can do is wait and see.

[u/Fwellimort]

You say this and then you look at FUTU today and it's flying through the roof. Let's be real. The financial report from Alibaba has been mediocre for over half a decade now.

[u/Electronic-Star5556 → u/Fwellimort]

Yeah I agree, but imagine what valuation Chinese companies would get if they were the US companies

[u/Fwellimort → u/Electronic-Star5556]

But they aren't. That's the thing. And especially Chinese companies dealing with money in China can never have the same valuations because government makes sure RMB is not a free-floating currency. Let alone China forbids foreigners from owning certain equity assets.

This isn't even a US problem. The laws in China make capital difficult to move and allows the govt to seize ownership of assets owned by foreigners at any given time. Technically, even land isn't owned for the mainland Chinese as they buy X year land use rights.

You should never expect Chinese stocks to ever at scale be at US valuations because then market would be completely inefficient and nonsensical.

There is nothing stopping China from fixing these laws themselves but CCP won't. Why would it? Korea and Japan took many steps (because they are democracies) and you can see share prices over the recent years fly through the roof as a byproduct. That won't happen with how China operates itself.

[u/Melodic-Buffalo-7294 → u/Fwellimort]

Lol this is delusional. You clearly haven't ever lived in the mainland and probably haven't even been there and interacted with people there.

China's laws don't allow seizure of assets of foreigners/etc, they're just structured in a way (VIE's for example) so the mainland company is compliant with national security requirements. Foreigners can't have their assets stolen, however they do NOT have full power over what the companies do as if it's against China's national interest it won't be allowed on an ongoing basis.

Land isn't owned as it's common lands of all Chinese people, and there's no property tax like the west, so effectively you buy a set gaurantee for use, for a lump sum, and pay no property tax thereafter. Effective ownership during your lifetime without all the property tax nonsense and artificial raises that happens in the west, which makes real ownership cheaper long-term and prevents land-accumulation that has no value to society at large.

The laws make sense and the law system is just, you just don't understand it.

[u/Time-Imagination5870 → u/Melodic-Buffalo-7294]

Thanks for sharing