You can’t think about
investing in overseas shares without exploring China as an option. While many investors are still focused on the FANGs of America, (Facebook, Amazon, Netflix, and Google), intuitive traders are turning towards the BATs of Asia (Baidu, Alibaba, and Tencent). For context, as of January 2018, only two Asian companies are valued over $500billion. The first was Tencent. The second was Alibaba, which trades as BABA.
Alibaba has barely been
trading at the NYSE for five years. The company had its IPO on 18th September 2014, and by close of trade, Alibaba had raised US$25 billion. It’s still the world’s highest IPO valuation to date. The next morning, when Alibaba officially started its run in the NYSE, the company was valued at US$231 billion, a figure it has doubled in half a decade. It holds position 9 in the list of the Top 10 global companies by brand value.
Tech is in
A tech-based company, Alibaba deals with AI, e-commerce, technology, retail, cloud computing, electronic payment systems, search engines for shopping sites, and internet services. The Chinese company was founded in 1999 and currently has an active presence around the globe. Regarding market value, Alibaba’s online sales have outranked the combined sales of Walmart, Amazon, and eBay since 2015.
Alibaba famously cashes in on China Singles Day, a shopping holiday that has been known to generate US$25.4 billion for the company in a single day. As a testament to the economic, social, and cultural influence of Alibaba, Singles Day – on November 11th – is considered the biggest shopping day of the year, similar to Black Friday or Cyber Monday in the US, however, four times as big.
You might have heard the story of Ali Baba from 1001 Arabian Nights. That’s where ‘Open Sesame’ comes from, and that’s where the company derived its name. Everyone in the world is familiar with the story, and the company had the vision of opening doors around the globe. Its 18 founders – including Jack Ma – raised US$25million from investors in its first year of businesses. Backers included Goldman Sachs, Soft Bank, and Fidelity.
Diversified Revenue Stream
Most businesses take an average of five years to break even – Alibaba attained profitability in three. Its diversity drives part of Alibaba’s success. Its holdings include Taobao, Ant Financial (formerly Alipay), and Alibaba Cloud Computing. Alipay also captures the imagination with innovations like Roewe RX5 – an ‘internet car’, or Ant Financials’ face recognition service that lets customers ‘pay with a smile’.
Global commentators are worried about China’s closed media and its current efforts to control ‘Chinanet’. In a way, this puts China tech companies at an advantage, because in addition to all their global achievements, they’ll be the only gateway to tech in China. Moreover, with the political scene leaning towards an extended term for President Xi and his Made in China 2025 initiative, it’s a good time to be looking into the BATs.
Monex Director discusses some interesting alternative to Facebook, Amazon, Netflix and Google shares