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9/18/14...a big day for the markets and your funds?

beebee
edited September 2014 in Fund Discussions
Two big market events coincede on Thursday of next week (9/18):

Alibaba will grab $23 billion from different parts of the market.
Scotland will vote on their independence.

Some see a "yes" vote for Scotland's independence as a black swan for the market.

The Scottish Referendum May Already Be A Black Swan (may require free registration)
seekingalpha.com/article/2484385-the-scottish-referendum-may-already-be-a-black-swan

Comments

  • I like Alibaba, but as I mentioned in another thread, the VIE structure is a risk element that people should be aware of (in other words, you're not investing directly in Alibaba.) You have Alibaba and Tencent as companies that have managed to branch out into multiple fields - e-commerce, social networking, payments, etc.

  • Scottland just seems to small (population, GDP, etc) to me to create the black swan event the author is concerned about.
  • Charles said:

    Scottland just seems to small (population, GDP, etc) to me to create the black swan event the author is concerned about.

    I think it's an event that may cause further stress for GBP, but aside from that, I'm not really seeing how it is an event that will cause an effect far and wide.
  • I think the concern symbolically is that if Great Britain can't stay together, how can the Euro Zone?
  • "Scotland just seems to small (population, GDP, etc) to me to create the black swan event the author is concerned about." (Edited for spelling)

    I agree, Scotland is too small of an economy to trigger any black swan. It does as @jlev mentions bring up the future viability of the EU.

    If anything, Scotland going independent has more positive possibilities. I read somewhere that Scotland could be Europe's Hong Kong. If Scotland were to go in that direction that could be a game changer as the other countries compete. We shall have to see what transpires. First comes the vote.
  • non events for me.
  • And Friday 09/19/2014 is a "Triple Witching Friday" - a fitting end to the week!
  • edited September 2014
    The Alibaba IPO may be causing money managers to take profits from some of their winners and use those proceeds to buy Alibaba shares. Could be a good time to put some dry powder to work as some good companies have sold off, or will sell off temporarily, even though the outlook for the company hasn't changed.

    The U.K. is a large force in the global economy. If Scotland leaves the U.K. then the size of the U.K.'s economy will become smaller. How much smaller? That is the question which has no answer and therefore is causing uncertainty in the markets.
  • If Scotland does leave the UK would Ireland be far behind?
  • Aye mate, 'tis a good question...
  • Isn't the Alibaba IPO on Friday the 19th and not Thursday the 18th?
  • PopTart said:

    Isn't the Alibaba IPO on Friday the 19th and not Thursday the 18th?

    Looks like 9/18 for Alibaba IPO.

  • I'm reading the 18th to decide the price and the 19th for go live.

    http://www.cnbc.com/id/101997655

    However, that seems to go against the Chinese thing with numbers. The 18th makes more sense since the number 8 is a very good number for the Chinese.
  • edited September 2014
    Hmmm, I guess that the IPO is on the 18th. I've read that the initial public offer price for Alibaba shares may be increased before the IPO due to such strong demand already. An uncertain day indeed!
  • edited September 2014
    PopTart said:

    I've read that the initial public offer price for Alibaba shares may be increased before the IPO due to such strong demand already.

    That's what Jim Cramer has been saying. He seems to be a big fan of the IPO at the original price of $60-$66, but says they may raise the price and make it unattractive. Wonder if anyone on MFO can even get shares of it for the IPO, and if they will.
  • edited September 2014
    rjb112 said:

    PopTart said:

    I've read that the initial public offer price for Alibaba shares may be increased before the IPO due to such strong demand already.

    That's what Jim Cramer has been saying. He seems to be a big fan of the IPO at the original price of $60-$66, but says they may raise the price and make it unattractive. Wonder if anyone on MFO can even get shares of it for the IPO, and if they will.
    You can get exposure to it pre-IPO via Softbank (SFTBY) or Yahoo. Softbank owns 37% of Alibaba and is not selling. I believe Yahoo has to sell a portion of their stake.

    I do think that the price will be increased, absolutely.

    As for Yahoo: "Based on the details disclosed in the F-1 filing, the market capitalization of Alibaba would be $147.54 billion at the mid point of the band offering (i.e $60-$66 per share). At this valuation, the pre-tax value of Yahoo’s 22.5% stake in the company work out to around $32.98 billion". Yahoo's current market cap is 42.65B. (http://www.forbes.com/sites/greatspeculations/2014/09/12/alibabas-ipo-price-likely-to-boost-yahoos-stock-price/.)

    Another way to play Alibaba: Softbank
    http://www.cnbc.com/id/101997292#.

    From that article: "With Softbank, the benefit you have is you have a manager who basically knows how to be a billionaire, there is no reinvestment risk as there is with [Yahoo CEO] Melissa Mayer."

    "With questions surrounding the governance of Alibaba, Garrity said investors may arguably be better off owning the company through a name that has a large stake, like Softbank. As an outside investor, given the ownership structure you're not really going to have a much of a say. You might as well align yourself with a company that's got a big seat at the table." (my note: Alibaba founder Yun Ma is a director on Softbank's board and Softbank founder Masayoshi Son is a director on Alibaba's board.)

    I do think that's a concern with Yahoo - the company has not done well in turning things around and while shareholders will apparently get some money from the stake in Alibaba that Yahoo has to sell, people are concerned with how Yahoo will spend the rest.

    Many think that either Softbank or Alibaba may buy Yahoo.

    I'm wondering if Softbank becomes another situation similar to Africa's media conglomerate Naspers, which owns a sizable stake in giant Chinese tech co Tencent. Look at Naspers over the last couple of years:

    http://finance.yahoo.com/echarts?s=NPSNY+Interactive#symbol=NPSNY;range=2y

    Softbank also owns stakes in social media company Renren and many other odds and ends (such as a stake in Yahoo Japan and Brightstar, the world's largest mobile handset distributor.)

    Keep in mind that Alibaba continues to expand into other countries. US store 11main is opening (https://11main.com/preview)

    Lastly, there's some other companies that benefit, including Singapore Post (http://www.forbes.com/sites/hengshao/2014/05/28/alibaba-to-buy-249-mil-stake-in-singapore-post-to-step-up-intl-presence/), which Alibaba bought a 10% stake in earlier this year.

    "The moves signal the resolve of this e-commerce giant to expand its sprawling ecosystem beyond China’s borders. The market in Southeast Asia is an under-developed but fast-growing one. In 2013, e-commerce in Singapore and Malaysia increased by 15% and 25%, respectively, a report by Payvision says. In Indonesia, e-Marketer cites a growth figure of 65% for the year. As evidence of the region’s potential, last year Rocket Internet launched Lazada, the Amazon equivalent of Malaysia, following the success of its online fashion retailer Zalora, while Japan’s Rakuten set up a regional headquarters in Singapore.

    Besides local customers in the region, the SingPost investment also seeks to capture two underserved groups of Chinese customers: overseas Chinese looking to purchase products on domestic websites, and domestic ones looking to buy foreign products directly from abroad. Currently, the bulk of these transactions is conducted through friends, relatives, and buying agencies (dai gou), often evading tariffs. One estimate by the China e-business Research Center put the total transaction amount of delegated foreign purchases at $12 billion in 2013."

    "In Russia, the high volume of sales through AliExpress once paralyzed a local delivery services provider."
  • Softbank is available as both an OTC listing and as an ADR. Any difference between the two?
  • edited September 2014
    Mark said:

    Softbank is available as both an OTC listing and as an ADR. Any difference between the two?

    Foreign ordinaries (ending in F) at some (not all, check with your brokerage) brokerages cost an additional amount to trade in - a number of brokerages tack on an added fee, but they (at least that I've seen) don't tell you up front, so you're paying $X commission plus an amount you'll find out later. The amount varies depending on the country, but I've heard instances of some brokerages charging potentially high fees depending on the country.

    ADRs don't have this situation. In some instances, there may be a varying amount of ADRs per one foreign ordinary.

    One thing I've noticed - and this is just in my experience - foreign stocks often are not able to be set up for dividend reinvestment/DRIP, but when they are, in many cases the ADR is and the foreign ordinary is not.

    Scotttrade discussion on ADR vs ordinary:
    https://research.scottrade.com/knowledgecenter/Public/help/Article?docId=37010be1721740e0879fb4b3510db8ed

    There are also sponsored vs unsponsored ADRs:

    http://www.investopedia.com/terms/u/unsponsoredadr.asp

    https://www.adr.com/ is an extensive ADR site set up by JPM to inform on ADR investing.

    Long story short, foreign ordinary vs ADR are two different ways to invest in the same foreign company. Both have pros and cons and what is best may vary depending on the situation/company.


  • beebee
    edited September 2014
    Pay attention the the potential positive ripple effect to other Chinese internet stocks in general. KWEB is an etf that might be one way to participate in the supporting companies.

    M* list of KWEB's top 25 holdings:
    portfolios.morningstar.com/fund/holdings?t=KWEB&region=usa&culture=en-US
  • Bloomberg also has a documentary on Alibaba playing today, which was produced in 2012 and follows Alibaba's fight against Ebay, along with a look inside the company in general.

    Trailer:
  • edited September 2014

    If Scotland does leave the UK would Ireland be far behind?

    Did you mean Northern Ireland? The six counties in Ulster that Lloyd George stole,and insisted stay in the union when the Irish Free State was born? Republic of Ireland, now. I visited in '93 and in '09. The first time, the Irish pundt was still extant, but in '09, it was euros. And the austerity which the gov't is so proud of, since the '08 Crash, has brought Ireland to meter and charge now for water usage. Ireland. GREEN Ireland. It's not green for no reason. But water will be metered and paid for, now. It's the dumbest shit ever. But someone is making money from it.

  • @Crash
    How do you pay for water where you live?
    Drill a well or a muni water system where we live.
    One is paying one way or another, eh?
  • Alibaba to boost IPO size:

    "Alibaba (Pending:BABA) is planning to increase the size of its IPO due to strong investor demand.Previously setting a $60-$66 price range per share, the Chinese e-commerce company plans to announce the new price range as early as today, and intends to raise the top end of the price range to above $70, Bloomberg reports.Alibaba is expected to set a final price for the shares on Sept. 18, with trading to begin the next day."

    http://seekingalpha.com/news/1981545-alibaba-to-boost-ipo-size
  • Too late for me. I bought shares of Softbank during the lull after the opening bell. I don't have enough billions to get any of the IPO shares anyway.
  • edited September 2014
    Mark said:

    Too late for me. I bought shares of Softbank during the lull after the opening bell. I don't have enough billions to get any of the IPO shares anyway.

    I added during the dip earlier, too.

    I'd recommend reading the annual report if you have a moment. I actually found it to be a detailed, well-organized look at the company and its plans for the future. It's certainly primarily a play on Alibaba, but I think there's actually a lot going on of interest at Softbank otherwise, including stakes in other companies (Renren, Yahoo Japan), venture funds and even robots.

    I kinda find the idea of investing in Softbank with a 37 or so % DIRECT stake in Alibaba and a seat on Alibaba's board a little more comforting than the IPO shares that have a stake in a Cayman holding co tied to Alibaba.
  • catch22 said:

    @Crash
    How do you pay for water where you live?
    Drill a well or a muni water system where we live.
    One is paying one way or another, eh?

    Hello. We have a municipal water-sewer system here. I have lived along the Ohio River in years past, in an area prone to flood, so some locks were constructed. Even so, rare floods still do happen. In that town (New Martinsville, WV) water was provided by the Utility, but was not metered at all.

  • edited September 2014
    White paper from Mesirow Financial
    Scotland’s Hamlet Moment
    To Leave, or Not to Leave? That is the Question.
    By Adolfo Laurenti, Chief International Economist

    "Concerns about a breakdown in
    the union are palpable, however, especially
    in assessing how viable Scotland would be
    on its own. We tend to agree with a skeptical
    assessment, for the following reasons:
    For good or bad, the British economy is
    much broader and diverse than Scotland
    will ever be. In terms of revenue, Britain
    can provide better pooling of resources
    but Scotland would rely on gas and
    oil revenues, a very volatile source of
    funding, which is at the mercy of global
    fluctuations in energy prices. Do not be
    fooled by the relative stability in prices
    that we have experienced in recent years.
    Tax revenue based on oil accounts for
    something between 1% and 2% of
    UK total tax revenues. In the case of
    an independent Scotland, they would
    account for 10% to 20% of the total.
    Funding an expanded welfare system
    on such a volatile source of revenue is a
    borderline reckless policy choice"
    http://www.mesirowfinancial.com/economics/laurenti/themes/globalmkts_0914.pdf
    Also:
    Some campaigners for a Yes vote in Thursday’s referendum on Scottish independence have argued that Clair could generate income and tax revenues that would sustain Scotland’s public finances for decades, but industry sources have emphasized the technical difficulties of extracting the oil.
    http://seekingalpha.com/news/1983855-ft-conocophillips-to-sell-north-sea-oil-stake-for-2b-3b

    A D R /OT C stock purchases.
    If I plan to buy a foreign stock I run a test trade to see the brokerage charges.Anything more than normal,I just move on.Have owned Canadian energy monthly dividend payers and an Argentine A D R. Foreign taxes are deducted from Canadian dividends that show up as a credit on 1099. Not sure in I R A s.I was accessed a fee of about 2% on my A D R dividend.
  • ...water will be metered and paid for, now. It's the dumbest shit ever.
    Hi Crash. Where I live in NY state, there is a water meter on very house or building and we pay for water used. Water is pumped out of Lake Ontario and purified at different stations. Metered usage sounds much like what you describe Ireland as doing.

    I've never given it much thought because I thought this was typical. Sounds more like your municipality just takes water use out of your taxes based on who knows what. But I guarantee, as catch was saying, it isn't free for you either (unless of course you have your own well).
  • Our family has paid for water as far back as I can remember. Not only do they pay for water coming in but for water going out. Sewer and storm drainage.

    Having a well is not that cheap either. No monthly bills but the initial cost of a well is way up there plus any pump issues. I had bladder tanks in my house and we figured every several years they would rupture. The only fix was a new tank at over $1000.
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