Why I sold out of my Alibaba position
Today I will share on the key reasons why I sold out of Alibaba positions ( both HK and US side). To give some context, I purchased Alibaba when it first IPOed in HK under the ticker 9988.HK at 183 HK dollars and have been holding the stock for almost two years. I even added to my position in US last year, to add on to my existing holdings. However, after considering various reasons and the current market sentiment, I decided to sell out of them.
I purchased the HK shares at HKD183 and sold at HKD211.00.
I purchased the US shares at USD 193 and sold at USD 229.
1. Political climate
As many of us would know, the start of this nightmare began when Ant IPO was blocked from listing on the HK exchange. I for one, was very disappointed as I had prepared to get in on the Pre-IPO to purchase Ant Group. I still remember the night before when it was blocked to list on the Shanghai exchange, and subsequently blocked to list on the HK exchange.
To add fuel to the flames, Baba was subsequently fined 2.8 billion for anti-competitive practices and subsequently the Chinese government planned a six-month crackdown on tech companies including Alibaba and Tencent.
Given the large amount of uncertainties, I decided to get rid of my Baba stocks when I was still in profit from my cost price.
2. Opportunity Cost
I have heard of investors saying that Baba will recover in time as it is still in a dominant position in the ecommerce space in China, and is deeply entrenched in China for any form of governmental policies to affect it. In my perspective, I have to agree with this point but my consideration is that I am not sure how long for the market sentiment to change about Baba. I know that Baba will be huge and can probably get past this, but the time horizon might be huge (>2 years or more) and the money can be put to better use if parked in other better money-generating stocks.
Given that there are other opportunities available, I think that it would be wise for me to sell out of Baba and invest the money in other opportunities that are subjected to less uncertainties and less dependent on the political risk. I can be wrong as the tides might change about Baba and they will recover quickly but I do think it will take some time.