Abstract: Explain the reasons of buying HK stock Alibaba Group and share my views.
Transaction detail
What I want to share with you today is the transaction I made on August 19. The details are as follows:
Bought stock
- Alibaba Group Holdings Ltd (HK stock code: 9988)
- Quantity: 100 shares
- Bought price: HK$164.1
- Commission fee: HK$43.76
Image source: http://www.aastocks.com/en/stocks/quote/detailchart.aspx?symbol=09988
Reasons to buy 9988
Alibaba’s stock price fell sharply again. It has fallen by 7% since I increased my position at HK$176.5 the day before yesterday. For the last purchase record, please see here. Therefore, the decision to increase holdings again this time is mainly because of the confidence in Alibaba’s long-term investment value.
Currently, Alibaba’s TTE PE has fallen to 19.5 times, which is absolutely underestimated compared to the company’s annual growth rate. I believe that the low valuation given by the market is due to the general belief that Alibaba’s current business model will be suppressed by the Chinese central government to be unsustainable. There are also opinions on the Internet that large technology companies such as Alibaba and Tencent will be regulated and transformed such that they will only be able to earn mid single-digit steady annual growth rate like utility companies. In short, the market is extremely pessimistic about these formerly sought-after companies right now.
My view is still relatively optimistic. I think the central government is not targeting individual companies. The purpose of increasing supervision is ultimately for the long-term sustainable development of the economy. Therefore, I still have hope for the long-term development of companies such as Alibaba and Tencent. I hope that now is just the darkness before dawn, and it will pass as soon as possible. But of course, we must also prepare for the worst case happening. Therefore, we suggest that you should not place heavy positions in a single company. Diversification of investment is always the right risk management measure that should be adhered to.
Comments and sharing
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