Even though it may have an estimated stock market value of 170 billion US dollars when it debuts at the NYSE this Friday, should potential investors be wary of Alibaba?
By: Ringo Bones
Started by Jack Ma, a former English teacher from Mainland China, back in 1999 as a way for small to medium scale manufacturers in The People’s Republic of China access to the global retail market, Alibaba is now poised to debut its IPO on the New York Stock Exchange this Friday, September 19, 2014. With an estimated stock market value of 170 billion US dollars, should investors be wary of investing in Alibaba?
Even though the Hong Kong Stock Exchange had forbade the entry of Alibaba on its trading floor earlier this year, it has managed to displace both eBay and Amazon when it comes to e-commerce on Mainland China back when eBay had 80 percent of the Mainland Chinese e-commerce market. At present, Alibaba now has 80 percent of all Mainland Chinese e-commerce in the bag, but why did the regulators at the Hong Kong stock Exchange denied its entry?
Emerging markets investing guru Joseph Mark Mobius of Franklin Templeton Investments recently cited his misgivings on the upcoming IPO of Alibaba in the NYSE due to the “nebulous” legalese surrounding investor by-laws when they buy a share of Alibaba. Is this based on the old adage of “a law is seldom enforced the further it is from its point of legislation”? Investing guru Mobius cites it could be and would be a problem.
According to Mark Mobius, even though Alibaba might become the United States’ biggest IPO for 2014, he recently cites the “inherent risks” that might be involved if one is so inclined in buying their piece-of-the-pie of Alibaba. The fly-in-the-ointment involves the still nebulous legalese that’s still to be resolved about how much control shareholders have on Alibaba. Currently, investors virtually don’t have a say when it comes to governing Alibaba and according to Mobius, CEO Jack Ma and his inner circle could leave late investors high-and-dry when they decide to no longer give them their fair share of dividends from Alibaba’s profits due to the fact, at the moment, Jack Ma and his inner circle could legally could under Mainland Chinese laws.