BABAF - Alibaba: Evergrande Debacle Adds On Macroeconomic Risk

• The pace of regulatory developments has far outweighed the pace of news on company fundamentals. This imbalance has resulted in a lot of conjecture about the eventual implications of regulations.
• I have a neutral view of Alibaba's $15.5B commitment to common prosperity initiatives. It will weigh on profitability over the near-term, but may have some muted benefits.
• However, with Evergrande's imminent collapse, fears of macroeconomic contagion have recently overshadowed company-specific fundamentals, in the past week.
• Alibaba is not directly exposed to the property crisis, though presumably a deep recession could drag Chinese equities down even further. Can cheap get ridiculously cheap?
• Emerging stock markets have generally come with some pretty wild swings. It's something to keep in mind, if/when adding to a position on the decline.

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