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.
1 comment:
Most institutional investors and hedge fund managers - and this probably includes emerging markets investing guru Mark Mobius - are quite wary on investing in Alibaba shares due to the still "nebulous" rigmarole legalese when it comes to foreign ownership laws - i.e. overseas shareholders - of Mainland Chinese based businesses like Alibaba. Foreign shareholders of Alibaba could be left high and dry if Alibaba CEO Jack Ma decides to dump them.
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