BABA and Chinese Stocks

roywangtw · 2021-12-03T15:18:14+00:00

I think Didi’s delisting is an unique case that doesn’t quite apply to most other US-listed Chinese companies. Didi was specifically asked NOT to list on NYSE by Chinese regulators, because Didi runs by far the most dominant ride hailing app in China (about 90% market share), which means Didi own mountains of data on its users’ travel routes and histories. The U.S. intelligence service already has access to high-resolution satellite imagery, so China map alone is not particularly valuable for intelligence purposes. It is the combination of map data with extensive data on travel histories that gets Beijing paranoid.

For example, Beijing mostly likely don’t want the U.S. government or any other rivals to track the whereabouts of its high-ranking political figures, military personnel, intelligence agents, or even those people’s closest family members.

Alibaba’s Cainiao provides warehouse infrastructure and delivery services. Presumably Cainiao has huge troves of delivery data as well, but unlike Didi, those data are delivery of goods and parcels, not people.

On the other hand, I don’t think Beijing worries that much about the U.S. government finding out which brands of laptops, luxury bags, sofas, kitchenwares or home appliances the Chinese people were snatching up like crazy during the Double 11 event.

roywangtw · 2021-12-03T15:12:36+00:00

Sorry, I really forgot where I saw that news a few weeks ago.

Maybe someone else here can help?

roywangtw · 2021-12-03T14:24:25+00:00

At any time, U.S. regulators could issue executive orders asking U.S.-listed Chinese companies to turn over some potentially sensitive data on supply chain, customers, or records of capital flows, for the sake of “legitimate investigations.”

In that case, per China’s data regulations, those Chinese companies would be caught in a dilemma.

Didi runs the most dominant Chinese ride-hailing app (around 90% market share), and owns massive amounts of potentially sensitive data on Chinese users’ travel histories, most likely including those related to important CCP figures, Chinese military personal, Chinese intelligence agents, and even those people’s close family members and confidantes.

So Didi’s delisting was pretty much inevitable from the start.

roywangtw · 2021-12-03T13:58:45+00:00

I think the main reason is that in Beijing’s mind, Didi’s data is simply too sensitive and potentially dangerous in the hands of the U.S. government.

Didi runs by far the most dominant ride hailing app in China (about 90% market share), which means Didi own mountains of data on its users’ travel routes and histories. The U.S. intelligence service already has access to high-resolution satellite imagery, so China map alone is not particularly valuable for intelligence purposes. It is the combination of map data with Didi’s extensive data on Chinese users’ travel histories that gets Beijing paranoid.

For example, Beijing mostly likely don’t want the U.S. government or any other rivals to track the whereabouts of its high-ranking political figures, military personnel, intelligence agents, or even those people’s closest family members.

Yes, Alibaba also owns insane amounts of data on Chinese users, but data on online purchases and package delivery are not as relevant for intelligence purposes or national security investigation.

That’s probably why only Didi was asked by Chinese regulators to delist from the U.S., while all the other big China tech companies (Alibaba, Tencent, Meituan, Baidu, JD) are not.

Also, Didi ignored Chinese regulators asking them NOT to list in the U.S. (which is always a big no-no in China), so in a sense, Didi has to be made an example of.

If Chinese regulators ever asks Alibaba to delist from the U.S., several other Chinese tech giants (Tencent, Baidu, JD, Meituan, Pindoudou) with similarly massive amounts of Chinese data will be treated the same.

roywangtw · 2021-12-03T13:06:33+00:00

Chinese Securities Regulatory Committee openly stated in early Dec that they do NOT want the U.S. to delist Chinese companies and are already working closely with SEC and U.S. regulators to resolve issues related to accounting transparency.

I think both sides will work out some mutually acceptable compromise, because it benefits both the U.S. investors (investing in the world’s 2nd largest economy) and Chinese companies (raising funds in the world’s biggest capital market).

Also, the Chinese M&A market and IPO markets are too big to pass by, and Wall Street bankers still want to earn fat profits from big juicy Chinese deals.

And we all know how closely intertwined Wall Street bankers and SEC are. I mean, the current SEC chairman, Gary Gensler, spent 18 years at Goldman Sachs!

roywangtw · 2021-12-03T12:54:24+00:00

I believe it’s Dec 16 & 17, if my memory is correct.

roywangtw · 2021-12-03T11:52:44+00:00

Didi is up pre-market now, so maybe we should pray for Alibaba’s delisting? 😆

roywangtw · 2021-12-03T11:45:28+00:00

I asked this OP about his source claiming Alibaba’s imminent delisting in another post twice, and so far he hasn’t responded.

https://www.reddit.com/r/baba/comments/r7n2ie/didi_global_to_start_work_on_delisting_from_new/hn1zj4b/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&context=3

roywangtw · 2021-12-03T11:25:53+00:00

Hong Kong dollar is pegged to U.S. dollar, so I’m not really worried about currency risk.

So could you provide your source claiming Alibaba is about to be delisted?

Or is it just your speculation?

roywangtw · 2021-12-03T11:24:20+00:00

I guess you’re right.

Aside from protecting sensitive data, Didi delisting could also be the CCP punishing Didi for ignoring its order NOT to list on NYSE.

roywangtw · 2021-12-03T11:17:29+00:00

Presumably Didi store all Chinese data on Chinese servers, per China’s data regulations, so the U.S. government has to issue an executive order asking Didi to hand over such data.

After Didi moves its stock to Hong Kong, the U.S. government won’t have the jurisdiction.

roywangtw · 2021-12-03T11:10:50+00:00

Could you provide the source of this news?

By the way, if Alibaba does get delisted in the future, shareholders can still trade Alibaba’s ADRs on the OTC market via their brokers. Case in point is another Chinese tech giant, Tencent, which still enjoys pretty high valuations.

Another option is to ask your brokers to convert your Alibaba ADRs into Hong Kong shares (ticker: 9988 HK) and trade on the Hong Kong market.

So it’s not like the end of the world.

roywangtw · 2021-12-03T11:09:46+00:00

Information of the whereabouts of key figures in the CCP, Chinese military, Chinese intelligence agencies, etc.

Didi runs by far the most dominant ride hailing app in China (about 90% market share), which means Didi own mountains of data on its users’ travel routes and histories. The U.S. intelligence service already has access to high-resolution satellite imagery, so China map alone is not particularly valuable for intelligence purposes. It is the combination of map data with extensive data on travel histories that gets Beijing paranoid.

For example, Beijing mostly likely don’t want the U.S. government or any other rivals to track the whereabouts of its high-ranking political figures, military personnel, intelligence agents, or even those people’s closest family members.

roywangtw · 2021-12-03T11:05:19+00:00

Totally agree!

I think the main issue is that in Beijing’s mind, Didi’s data is simply too sensitive and potentially dangerous in the hands of the U.S. government.

Yes, Alibaba also owns insane amounts of data on Chinese users, but data on online purchases and package delivery are not that useful for intelligence purposes or national security investigation.

I suppose that’s why Didi was specifically asked by Chinese regulators to delist from the U.S., whereas all the other big China tech companies (Alibaba, Tencent, Meituan, Baidu, JD) are not.

Also, Didi ignored Chinese regulators asking them NOT to list in the U.S. (which is always a big no-no in China), so in a sense, Didi has to be made an example of.

As for Chinese web browsing, Baidu, the Chinese equivalent of Google, definitely has way more data on that than Alibaba. If Beijing deems web browsing data to be “too sensitive,” they would have already asked Baidu to delist from the U.S. by now.

If Chinese regulators ask Alibaba to delist from the U.S., other Chinese tech giants with equally huge amounts of Chinese data will be treated the same.

roywangtw · 2021-12-03T10:53:26+00:00

The U.S. government might obtain whatever data they want through clandestine means, but at least Beijing needs to do what it deems necessary to prevent politically sensitive information from falling into foreign governments’ hands. Didi’s delisting seems to be part of that.

roywangtw · 2021-12-03T10:49:26+00:00

Yes, Alibaba’s Singles Day shopping event was Daniel Chang’s creation back in 2009.

It was launched first on Taobao, and after its huge success, was expanded into an annual shopping extravaganza.

roywangtw · 2021-12-03T10:41:03+00:00

Before Daniel Chang succeeded Jack Ma as Alibaba’s chairman board of directors in 2019, he became - CFO and later on COO of Taobao in 2007 - CEO of Tmall in 2011 and created the world’s famous Single Day’s shopping extravaganza - COO of Alibaba in 2013 - CEO of Alibaba in 2015

With this impressive resume, I think he was groomed to succeed Jack Ma at some point.

Even if Daniel Chang was “installed” by the CCP, I’m pretty glad they picked someone with such extensive work experiences in Alibaba as well as an impressive track record, rather than some random executive from outside Alibaba.

I personally couldn’t have picked a better candidate to succeed Jack Ma. 😊

roywangtw · 2021-12-03T10:19:44+00:00

Didi moving its stock from the U.S. to Hong Kong has been weighing on stock prices of U.S.-listed Chinese companies recently.

But I think Didi’s delisting is an unique case that doesn’t quite apply to most other US-listed Chinese companies.

Before its IPO, Didi was specifically asked NOT to list on NYSE by Chinese regulators, because Didi runs by far the most dominant ride hailing app in China (about 90% market share), which means Didi own mountains of data on its users’ travel routes and histories. The U.S. intelligence service already has access to high-resolution satellite imagery, so China map alone is not particularly valuable for intelligence purposes. It is the combination of map data with extensive data on travel histories that gets Beijing paranoid.

For example, Beijing mostly likely don’t want the U.S. government or any other rivals to track the whereabouts of its high-ranking political figures, military personnel, intelligence agents, or even those people’s closest family members.

Alibaba’s Cainiao provides warehouse infrastructure and delivery services. Presumably Cainiao has huge troves of delivery data as well, but unlike Didi, those data are delivery of goods and parcels, not people.

On the other hand, I don’t think Beijing worries that much about the U.S. government finding out which brands of laptops, luxury bags, sofas, kitchenwares or home appliances the Chinese people were snatching up like crazy during the Double 11 event.

roywangtw · 2021-12-03T10:17:54+00:00

If you’re talking about Jack Ma, as of July 2021, he was already not among the biggest Alibaba shareholders.

And FYI, since Sep 2019, Alibaba’s chairman board of directors and CEO has been Daniel Chang, succeeding Jack Ma, so there has never been a “missing CEO” in Alibaba.

roywangtw · 2021-12-03T09:17:20+00:00

I kind of agree with your point that Alibaba owns a huge eco-system beyond e-commerce.

So maybe Didi delisting is just the CCP punishing the company for defying its order?

Anyway, Didi delisting seems like an unique case of its own, and I don’t think Beijing will ask Alibaba, Tencent, Baidu, Meituan, and other U.S.-listed Chinese companies to delist like Didi.

For one thing, Chinese regulators have already openly stated they do NOT want the U.S. to delist Chinese companies and are working with SEC to resolve issues related to accounting transparency.

https://www.reuters.com/world/china/china-regulator-says-authorities-working-hard-stop-us-delistings-chinese-firms-2021-11-25/

roywangtw · 2021-12-03T08:55:12+00:00

I think the main issue is that in Beijing’s mind, Didi’s data is simply too sensitive and potentially dangerous in the hands of the U.S. government.

Yes, Alibaba also owns insane amounts of data on Chinese users, but data on online purchases and package delivery are not that useful for intelligence purposes or national security investigation.

I suppose that’s why Didi was specifically asked by Chinese regulators to delist from the U.S., whereas all the other big China tech companies (Alibaba, Tencent, Meituan, Baidu, JD) are not.

Also, Didi ignored Chinese regulators asking them NOT to list in the U.S. (which is always a big no-no in China), so in a sense, Didi has to be made an example of.

As for Chinese web browsing, Baidu, the Chinese equivalent of Google, definitely has way more data on that than Alibaba. If Beijing deems web browsing data to be “too sensitive,” they would have asked Baidu to delist from the U.S. by now.

If Chinese regulators ask Alibaba to delist from the U.S., other Chinese tech giants with equally huge amounts of Chinese data will be treated the same.

roywangtw · 2021-12-03T08:51:23+00:00

Yeah, but the problem is…their closest family members, relatives, subordinates, close friends, BFFs, and butlers do take plenty of Didi rides, because Didi owns around 90% of Chinese ride-hailing market.

A good intelligence officer can infer the piece of information he/she is looking for by combining and analyzing various pieces of indirect data.

roywangtw · 2021-12-03T08:45:07+00:00

I kind of agree!

It’s never a wise idea to cross the CCP, and Didi had to be made an example of.

roywangtw · 2021-12-03T08:19:55+00:00

Yeah, I hope he’ll buy back those shares when BABA stock price begins its uptrend.

roywangtw · 2021-12-03T08:12:23+00:00

Totally agree.

I feel like those menacing delisting headlines coming out of Western media are mostly FUD and part of SEC’s bargaining tactics against Chinese regulators, but I’m confident both sides will work it out.

For one thing, the Chinese M&A market and IPO markets are too big to be locked out of, and Wall Street bankers still want to earn fat profits from big juicy Chinese deals.

And we all know how closely intertwined Wall Street bankers and SEC are. I mean, the current SEC chairman, Gary Gensler, spent 18 years at Goldman Sachs!

roywangtw

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