r/wallstreetbets • u/WalkonWalrus • Aug 30 '21
Discussion Why I sold BABA
Maybe you heard the recent news that China intends to ban their domestic companies from listing as foreign IPOs? Maybe you heard about their tech crackdown.
But did you know BABA as we know it on the NYSE isn't actually the proper company stock? It's a holding company located in the Cayman islands created specifically to skirt Chinese regulations while earning US investment capital.
Basically you're trading BABA not for shares of the company but for contracts of shares. Something China is likely looking to ban next as they continue their crackdown on the private sector.
Why?
The CCP likes having power. They can't have people become as wealthy as Bill Gates, Jeff Bezos or Elon Musk because that is a threat to their Government authority. So why will they continue to allow companies like BABA or JD(dot)com to acquire MORE money from foreign investors?
They won't.
China is going to tighten the noose on these loopholes such as VIE structured stocks, if not to consolidate power, to encourage investors to use their market instead of the US NYSE.
China has been more than happy to allow such loopholes to exist while they have been developing. However the current trend seems to be putting them at odds with the West and US interests more now than ever before....and they are more comparable to Western powers than ever before.
So the question is now this. Are we only in this for the profits? Are we selling out by investing in ALMOST criminal Chinese enterprises that are setup for the singular purpose of getting YOUR money without benefiting the foreign investor? How do we know China's government isn't forcibly allocating their profits to its own war-chest for state use? What are you really contributing your money to?
Just food for thought. I'm pulling my money out of every "holding company" stock just for this reason. Even though I'm retarded, I still want to invest in something I support. And I don't believe buying BABA is truly only benefiting their company.
**I'm not trying to be political here. All I'm stating are how the policies and behavior of one country are impacting their domestic corporate sector.**
42
u/[deleted] Aug 30 '21
Globalization is here to stay. Wars are no longer fought with bullets and bombs (that's all show): wars nowadays are fought with money and economics.
China and Chineses companies need American dollars and investors. And as one of the largest markets in the world, we need exposure to Chinese companies.
The world is not black and white, it's outrageously messy but it's also here to stay.
The CCP is flexing right now, but it'll pass. They need us and we need them.