Invest in IPO Stock Cainiao? Read & Decide.
Wall Street stocks recovered marginally on Mon, 25 Sep 2023.
It “managed” to shake off last week’s jitters surrounding the Fed’s "higher for longer" interest rate strategy.
By the time market called it a day:
1) Dow Jones Industrial Average.
+0.13% (+43.04 to 34,006.88).
2) Standard & Poor’s 500:
+0.40% (+17.38 to 4,337.44).
Index was due to $Amazon.com(AMZN)$ and Energy stocks (+1.4%).
Index has slid about -6% since late July.
It remains +12% for YTD performance.
3) Nasdaq:
+0.45% (+59.51 to 1`3,271.32).
Advancing issues were roughly even with decliners.
The "conflicting struggle” centres around:
Investors getting more concerned about 'higher for longer' elevated interest rate and
Bulls wondering if they have seen the “last” of correction and could start to rebuild from these levels higher.
US market weekly performance rests squarely on the following factors:
UAW strike negotiation.
US government shutdown outcome.
US Q2 GDP - 3rd estimates, that both Wall St & the Fed will note, to decide when the final interest hike will be.
Quarterly earnings report will influence a reporting company’s stock but not the composite index, not unless we are referring to the Magnificent 7 ( $Microsoft(MSFT)$ , Tesla Inc , Meta Platform Inc etc…).
On a different note, in a regulatory filing on Tue, 26 Sep 2023 — Chinese e-Commerce giant $Alibaba(BABA)$ announced that it plans to list its logistics unit Cainiao on the Hong Kong Stock Exchange.
The move is part of Alibaba’s plan as announced in March 2023, albeit a radical one in Alibaba’s history.
Upon completion of the spin-off, Alibaba will continue to hold >50% of the shares of Cainiao.
Honestly, if you asked me, I do not believe for a second that it is the company’s intent nor decision to split its structure into six individual business units, the majority of which will be able to raise outside funds and go public.
It is safe to assume that Cainiao listing is a “done” deal already.
The begging question is “will the IPO be successful”?
Of the many exchanges available to list Cainiao - why Hang Seng and not Nasdaq?
$HSI(HSI)$ YTD performance (see above) has not exactly stellar.
It has been trending downwards steadily since January 2023.
To date, it has lost about -13.28% with the lowest achieved on Tue, 26 Sep 2023.
As mentioned, many times over, I do not think the Chinese and HK markets will recover any time soon, not until the tension between US & China eases.
Reuters have reported on 15 Aug 2023 that US hedge funds are making a beeline out of China.
They too have realized that the standoff between the two superpowers will not dissipate anytime soon.
Rather than having their monies get “sucked and stuck”, it would be more prudent to deploy it elsewhere.
It is nothing personal, it is just business — really.
As long as US’s old monies does not return, mere mortals (ahem investors) like us should take note as well?
So far, Alibaba’s YTD performance has not been fantastic either.
It has lost about -5.18% since January 2023.
It hit bottom on 30 May 2023, at $78.67 per share.
Logically, Cainiao IPO price will unlikely be near $87, for it has not proven itself as a standalone.
While the restructuring is meant to happen, must it be now (??) when the parent company stock is still languishing.
Is there a need to hurry the IPO along?
Objectively, listing on Nasdaq is not really a guaranteed success too.
Just look at UK chip designer $ARM Holdings Ltd(ARM)$ that just IPO on 13 Sep 2023 at $51 per share.
It did gain approximately +25% on its debut.
However, given that the IPO happened when US market is weak and jittery - the gains gave way to losts.
It even fell below its IPO price to $50.18 last Thu, 21 Sep 2023.
As of yesterday, it managed to recover some grounds.
However, there is no telling how the stock will fare in the coming days and weeks as the 4 factors (mentioned above) continue to unfold.
In case you are interested, my other “PICK” posts. Please enjoy:
Govt shutdown impacts US market & vice versa. Click here! to read, give a “like” ok. Tks.
Do you think Alibaba should be listing Cainiao now?
Do you think listing in Hong Kong is “better” than in Shanghai or Nasdaq?
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Not sure a $1B IPO where BABA owns 70% of the entity and still wants to maintain 50% after the IPO will add a lot to BABA with over USD220B?
Alibaba will retain the majority ownership of Cainiao, so you will still have exposure to Cainao. If you want greater exposure, you will need to buy shares in HK.
Alibaba will continue to hold a majority stake in Cainiao, but investors would be able to invest only in this company if they prefer it over the Alibaba holding company. I think Alibaba is moving to a holding model, like Tencent.
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According to their announcements, only the Cloud business will spin off for now. Cainiao will just go public and Alibaba will hold 50+ % of it.