America, The New China Play

Posted: October 31, 2007 in Technology and Business
China is big.
 
I’ve been enamored with China ever since I found out (many years ago) that there were more cell phones in China than people in the United States.
 
Was pretty easy to see that companies like Baidu (BIDU) were going to be something special.
 
China — and Chinese stocks — have been on an amazing tear.  For example, BIDU priced at $27, opened at $66, and now trades above $350… in about two years time.
 
But China is scary to most U.S. investors.  Too much like the Wild Wild West for our taste.  (BTW, that’s true on so many levels.)
 
So I think it came as a big surprise to many U.S. investors over the last few weeks that one of the year’s most hotly anticipated foreign IPO’s — Alibaba.com (1688.HK) — is almost 40% owned by America’s very own — surprise — Yahoo!.
 
How hot is the Alibaba.com IPO?  They had $100 billion in IPO orders chasing just $1.5 billion in IPO shares.  That’s red hot.
 
But, Yahoo! doesn’t just own almost 40% of Alibaba.com… they own almost 40% of The Alibaba Group, a holding company for a number of other important Chinese web properties, most of which are expected to come public in as equally a frenzied state.
 
What this all means is YHOO is now very much a Chinese play… especially for the U.S. investor that can’t stomach a direct investment in China.
 
And, it’s only a matter of time before U.S. investors realize GOOG is a Chinese play, too.  After all, Google is #2 (behind Baidu) in search, not an insignificant position.
 
And, didn’t Microsoft just report killer earnings, fueled in large part by international strength?  Let’s not forget Microsoft has been investing in China for years.
 
Bottomline:  Pretty much every major American technology company has a footprint in China… and that will pay big dividends, starting, well, right now.
 
P.S.  Re: YHOO:  At least initially, look for YHOO to have a taste of volatility as Alibaba.com (stock symbol:  1688.HK) goes through its inevitable gyration upwards.
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