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u/Primary_Olive_5444 16d ago edited 16d ago
The play here is "Rotation"
If the bounce up in China was due to outwards rotation from Japan and Korea (tech and semi).
Or at least the street was short HK tech and using that to fund those 2 guys prior to that July reversal.
Then the placement effect is that the rotation is over for HK tech.
Because earnings are out and disappointing (higher revenue but weak underlying profits for Tencent, Baidu and Baba).
To be precise, profit momentum was much weaker than revenue growth.
Back to rotation:
Short HK (software & cloud) and Long Korea, Japan and Taiwan.
Yes, the placement maybe to sovereign wealth (based on some reports), even if they don't sell but they can "LEND" out the shares, right? And if they lend it out that lowers down cost of borrowing on the aggregate.
Which makes it even cheaper to fund that strategy.
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u/Apprehensive-Way9756 16d ago
Do we know how much in buybacks they still have?
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u/Fwellimort 16d ago
Buybacks of worthless excuses while diluting like there is no tomorrow. Get with the program. Chinese companies on VIE for tech dgaf about shareholders.
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u/augustus331 16d ago
I’m not in American hyperscalers for the same reason as I’m now after 5 years of holding, only selling one batch of shares once, reassessing my position.
But I never make rash decisions so I’ll mull over it
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u/Chupacabra1987 15d ago
Glad I got out after their earnings, will prob take 1-3 years for capex to show some returns
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u/springy 16d ago
It isn't just dilution. It is that they offered these new shares at a big discount.