Thanks for the update. I have a question when it comes to BABA (or rather, all Chinese ADRs) I noticed that the ADR BABA and 09988.HK always seem to adjust themselves to kind of keep on par with each other when market opens. It seems to me that people are shifting from US equities to HK/Chinese equities. Do you think there will be an impact on that (if the Chinese government stances stays the same) on equities such as BABA having a sustained higher than S&P 500 P/E ratio fuelled by a sustained inflow of funds into HK market?
Great question Denise - if the composition of BABA/KWEB shareholders starts becoming more Mainland focused rather than foreign institutional investors, then the previous valuation cycle may not be as valid. But that shift is gradual.
For now, US ADRs control a sizable portion for trading volume in BABA. Until there is an even larger shift to 9988HK (which is where Mainland capital is parked), I still expect U.S. / Foreign investors to have weight in determining valuation for the sector.
Thanks for the update. I have a question when it comes to BABA (or rather, all Chinese ADRs) I noticed that the ADR BABA and 09988.HK always seem to adjust themselves to kind of keep on par with each other when market opens. It seems to me that people are shifting from US equities to HK/Chinese equities. Do you think there will be an impact on that (if the Chinese government stances stays the same) on equities such as BABA having a sustained higher than S&P 500 P/E ratio fuelled by a sustained inflow of funds into HK market?
Thanks in advance.
Great question Denise - if the composition of BABA/KWEB shareholders starts becoming more Mainland focused rather than foreign institutional investors, then the previous valuation cycle may not be as valid. But that shift is gradual.
For now, US ADRs control a sizable portion for trading volume in BABA. Until there is an even larger shift to 9988HK (which is where Mainland capital is parked), I still expect U.S. / Foreign investors to have weight in determining valuation for the sector.
Thank you for the reply Larry! Great perspective