The ‘Canary in the Coal Mine’ for Chinese Stocks

The Largest Online Marketplace in the World This company is twice the size of Enron at its peak ($100 billion). Pharmaceutical giant Valeant, which blew up in the last year, was only $90 billion at its peak. Before I get to what the stock is, let me tell you where it is: China.
I recently heard an excellent presentation by Anne Stevenson-Yang at Grant’s Spring Investment conference. Stevenson-Yang is the cofounder of J Capital Research, based in Hong Kong. J Cap provides independent research on China’s stocks and its economy.
To understand China’s economy today, she said, think of Silicon Valley in 1999. You may recall that was one year before the tech bubble peaked, then collapsed. The similarities between Silicon Valley (circa 1999) and China (from about 2006 on) are striking.
In China, there’s a big emphasis on growth… but not so much on profitability. Much like the days of counting website visits (or ‘counting eyeballs’) instead of profits in 1999.

This post was published at Acting-Man on April 25, 2016.


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