I have been extremely busy with work these days with major projects coming in one after another and not really fully monitoring my various investment portfolios. It therefore came as a big surprise to me (Stunned like a vegetable) to find that Alibaba (HK9988) has surged by more than 50% within 3 weeks. My position in Alibaba is neither big nor small....my current cost quantum is around S$33K per record at an average of HKD77. Recently, I was astounded when I looked at my trading App. The sleeping giant had suddenly awaken.
1. Beneficiary of DeepSeek Rally and iPhone AI Partner in China
The mind-boggling spike in share price seems to be primarily driven by the DeepSeek AI rally and also the announcement of Iphone partnering with iPhone for their China market. When Alibaba unveiled its own latest version of AI after the DeepSeek announcement, it created quite a big stir for its incredulous progress. In addition, Alibaba has also invested in many AI firms. Simply put, Alibaba is now China's AI darling. It has morphed from an E-commerce company to an AI Tech company- at least, this is what the market perceive for now.
2. Sell Immediately To Take Profit or Hold On?
Alibaiba (HK9988) seems to be a very volatile counter. In 2022, it dropped a whopping 30% from HKD100 to HKD 71 in less than a week- simply too unpredictable. It also has periods where it languished for the longest time in the HKD70-HKD80 per share range. While it is tempting to just sell off to lock in the profits based on the historical lesson of huge rally running out of steam and then self implosion shortly, I think that I will be holding on to it for a longer term to see whether its AI transformation story can take it futher to become a multibagger winner. Its financial PE ratio is also still attractive despite the sharp rally in stock price this past week.
Parting Thoughts
Since my stake in Alibaba is neither here nor there (not material enough), I guess I will just leave it in my portoflio without further action. The China AI rally has also helped breathe life into my other current China holdings such as Link REIT, Ping An and China banking stocks. This does somewhat helped to offset the disasterous performance of SREITs recently.
It might be good to sell some stake, the purchase is very strong that RSI is at 90 (above 70 means overbought and a selldown happens after). Usually this means a short term sell down will happen, so I wont be surprised that Alibaba drops back to 115 level. Monetisation of AI models will take a few years to happen, baba will be burning money for Qwen to gain mass adoption
ReplyDeleteHi Choon Yuan, thanks for dropping by and sharing your thoughts. You are right….it maybe prudent to take some profits off the table in view of the super high RSI….will decide on Monday.
DeleteBtw, congrats to you on your positioning in Alibaba….i recalled you had built a signifiant stake in it wor.
Gxgx! Churning in huge profits again!
ReplyDeleteBro BF, aiya....my stakes are not very large lah. Also for all we know, this might be a short-lived rally and then Alibaba went down back to its usual HKD70-HKD80 per share for years again.....haha.
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