Hello for the month of June and Happy Chinese Dragon Boat Festival!
The Dragon Boat Festival (端午節) is a traditional holiday which occurs on the 5th day of the 5th month of the Chinese Lunar calendar. On this day, we eat Chinese rice dumpling to celebrate this special holiday.
In this special day and also in the month of JUNE, let’s briefly talk about an amazing Chinese company named ALIBABA which is also founded in the month of June.
ALIBABA
Alibaba, also known as Alibaba Group is a Chinese company founded by Jack Ma with his 17 students and friends in HangZhou, China on 28th June 1999. Since then, Alibaba has grown into a business behemoth and has setup its footprints all around the world.
A lot of people compare Alibaba with Amazon, but I honestly think that, though their business nature may look similar (as they are both strong in e-commerce business), they both actually have different business model. Alibaba does not sell products directly to consumer and they are asset-light (they are a digital marketplace for merchants and consumers) whereas Amazon does sell products directly to consumer and it focuses its infrastructure and inventory.
Alibaba has the following business segments: -
1. Core business in its digital retail and wholesale marketplace;
2. Cloud Computing;
3. Digital media and entertainment; and
4. Innovation Initiatives and Others.
Alibaba has been able to stay in growth mode despite a slowdown in its core e-commerce business. What really excites me is Alibaba's cloud service/computing businesses as they showed solid growth.
Lately, Alibaba’s cloud unit has pledged $1 billion to support startups in Asia. Alibaba said that the funds and resources would go towards boosting digital skillsets for one million professionals in Southeast Asia. The cloud computing industry is the future to go. With such investment, I strongly believe that cloud computing in Asia will be the “next big thing” and in tandem with the organic growth of its businesses in other segments, we can gain from such investment massively from Alibaba.
More excitingly, Alibaba cloud plans to open its first datacenter in the Philippines by the end of this year by offering a range of services such as Elastic Computer Service, storage, and content delivery network. Further to that, and will also build an innovation center in Malaysia to offer support and resources for local startups to expand.
RISK
Alibaba stock has been on a downtrend and I believe this is because of the increased regulatory scrutiny (on Chinese antitrust law) and also the geopolitical tensions between China and USA.
Having said that, I will still maintain my outlook in Alibaba and bet on its cloud business and China’s economic growth.
XRP RIPPLE
Last month, I have allocated 2.5% out of the total value of my portfolio to invest in XRP Cryptocurrency. The risk of such investment is cautiously calculated and also mitigated through my other investments in great companies. I am not worried about its volatility at the moment.
PERFORMANCE
As of today, there is no investment from me in June.
Since the inception of our fund in May 2020, we have been up close to 42.51%. We are still able to maintain our risk level at 4 as can be seen from the “average risk score”.
Sometimes, the best investment is not to make any investment decision, but keep observing.
Having said that, I am currently looking at adding some more position at APPLE. I may write more on that and also on the topic of hyperinflation.
Happy Dragon Boat Festival! And Stay safe.
Norman Liew
MNMLH
14.06.2021
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