To The Moon

Since March, Vipshop Holdings Limited, Weibo Corp, Xunlei Ltd, Kingsoft Cloud Holdings, ZK International Group Co Ltd, KANZHUN LIMITED, Futu Securities, BABA and other Chinese stock companies have announced stock buyback plans or expanded share buybacks. Among them, BABA high-profile announced that the total amount of buyback funds will be raised from US $15 billion to US $25 billion, and the share buyback plan is valid for two years to March 2024. It is understood that the buyback amount may set a record for the repurchase scale of Chinese-listed stocks.

As I invested in US stocks earlier, many friends asked me: now that the US economy is so bad, inflation is so high, and we are constantly preparing to raise interest rates, it is already a high probability that US stocks have fallen sharply. The United States is now promoting the return of global capital back to the mainland through various means. In addition, in the early stage, we Chinese companies are so intensive to buy back stocks in the United States with a huge amount of money. Will it fall right into the trick of the Americans and fall into a trap set by Wall Street?

In response to the above worries and doubts of my friends, I would like to briefly talk about my personal views:

To answer this question, it is necessary to understand what is "US-listed stock buyback".

It refers to the behavior of Chinese companies listed in the United States to buy their own shares directly in the secondary market with their own funds.

Generally speaking, to a certain extent, the stock buyback of listed companies conveys to investors in the market a message that listed companies have great development potential and that major shareholders are more optimistic about the stock, which will increase investor confidence in the market and increase buying. driven by the purchase order, the stock price will rise, which can help the short-term rapid rise of the stock price. This is a win-win good news for shareholders of listed companies and investors in the secondary market.

Second, after the completion of the repurchase of the superior company, if the stock price continues to rise, the capital repurchased by the superior company will certainly increase in value; if the stock price continues to fall and the stock price is lower than the previous repurchase price, this part of the funds repurchased by the superior company will naturally result in a loss. So how to predict whether the repurchase capital will increase in value or lose money? We know that the market index is composed of individual stocks with relevant components, and the general rise and fall of the market will affect the rise and fall of individual stocks, because the trend of the market will generally affect speculators' prediction of the trend of individual stocks, forming the so-called "herding effect". Therefore, the rise and fall of the market will generally have an important impact on the rise and fall of individual stocks.

Finally, let's take a look at the possible trend of the US stock market in the light of the US economy. We will not repeat the general situation of the US economy one by one, only to say that the Fed has entered a period of rapid interest rate hikes, which will be a great bearish to the US stock market. In addition, US real estate prices have soared to 52.7% from the previous high in 2006 and 110.4% from the previous low in 201112, which makes people worry about whether the subprime mortgage crisis similar to that in 2008 will happen more violently. After the subprime mortgage crisis in 2008, the three major stock indexes in the United States fell from the beginning of 2008 to March 2009. the Dow Jones Index fell from 13000 to 6500, the NASDAQ fell from 2600 to 1350, and the S & P 500 fell from 1400 to 800. almost halved in more than a year. This shows that once the US stock market collapses intermittently, its lethality is indeed huge. No wonder friends are worried about the current situation of US-listed stocks.

However, we should also see that due to the suppression of short selling in the early stage, as of the first quarter, among the top 20 Chinese stocks by market capitalization, the share prices of 17 Chinese stocks have fallen, of which XPeng Inc. 's share price has fallen the most, reaching 45.18%. In terms of long-term share price performance, BABA, a well-known Chinese stock, has fallen about 66 per cent from its high of $319.32 to its latest closing price of $108.8. JD.com 's share price also fell about 47 per cent from a high of $108.29 to its latest closing price of $57.87.

At this time, the above-mentioned Chinese companies announced buybacks, one is to show that the company believes that its share price is seriously undervalued, and the other is to use relatively small funds to pry up the stock price, playing the effect of four or two dialing thousands of pounds. After all, the share of funds used for buybacks is very small for the market capitalization of the superior company.

Therefore, the repurchase of US-listed stocks by friends should be comprehensively considered and judged in the light of comprehensive factors. We should also believe that these Chinese-listed companies are the elites of the business community and have been struggling in the international capital circle for many years. There is a rigorous and careful overall control over buyback behavior.

In addition, I think: whether to engage in buyback or not is not the most important thing for any listed company, only to expand and strengthen their main business and endorse their company's stock price with excellent operating performance.

Does my readers agree with my understanding and reasoning look forward to your comments and criticisms ?

$XPeng Inc.(XPEV)$$Alibaba(BABA)$