Molson Hart

3. There is a long history of foreigners learning that what they think they own, what they should own according to "global norms" is not theirs. The semi-legal VIE structure is one such example

4. You're from Singapore. Singapore built an entire city in Suzhou as a model for positive economic development. What happened after that? Chinese local gov't duplicated it next door and undercut it via lower tax rates. Par for the course.

5. This is the main point. If you look at my original tweet, I didn't say I'm bearing on JD, I said people underestimate the gov't risk of it going to zero either by government "assassination" or simple nationalization.

This whole conversation is stupid. I mean...JD is cheap because smart people know you can't trust the Chinese gov't. You know what else is cheap? Russia. It's cheap for a reason.

Yeah, that's a good point. Downside risk is just one part of the story. I'd say the other half is network effects. BABA is a lot bigger than JD and e-commerce marketplaces don't play catch up like retail does.

Taking a 1% stake is hardly nationalization. Most VIE structures which broke down were not govt-driven, but mgmt-driven (Alipay, GigaMedia, etc). Post-industrial revolution, any large country which industrialized copied their predecessors, and grew much faster as a result.

I think you vastly over-estimate the risk of nationalization (outright or implied) because you insist on a “heavy” discount. Unsure regarding your definition of “heavy” but lets say conservatively you mean 30% We don’t see 3 in 10 firms getting nationalized.