The Contrarian Investor: The Alibaba money machine

The Alibaba money machine

Chinese equities have had a decent run over the summer, but local equities overall continue to sit in the dog house, at least in valuation terms.

The CSI 300 index, for instance, tracks China's largest companies and currently trades at 8.8x profits compared to 11x for MSCI's emerging markets index. But this cynicism towards China is not total – stick the name Alibaba on the front and everything changes. Founded 15 years ago by a certain Jack Ma, the Alibaba magic machine has finally arrived on the US markets, raising $25bn via an IPO. Rumour on the street is demand was above $50bn and, not surprisingly, the share price raced ahead from its opening $68 to hit just over $100 before falling back, the last time I looked, to $90 a s...