From SoftBank To Apple, Capital Cringes At Xi
SoftBank and Prosus are selling more Alibaba and Tencent.
That's not the best news if you own Alibaba and Tencent (which you probably do, by the way, assuming you have emerging market equity ETFs in your portfolio). SoftBank and Prosus are, of course, the largest shareholders.
Or at least they were the largest shareholders, but in SoftBank's case, Masayoshi Son's humbled behemoth is in the process of selling "almost all" its remaining Alibaba stake through $7.2 billion in prepaid forward contr
Away from China is the way to go. Glad that Apple has begun to diversify. A battery company I own is building a production facility in Malaysia.
Xi is putting a stake in the ground to assert China’s supremacy and ability to exercise dominance. But in the process he’s only showing the limits of his understanding of the world and his own country. Unfortunately, it’s going to yield a sad outcome for China, particularly in light of the population challenges and (probably) the fiscal challenges they’re going to realize in the next decade.
Prosus was set up with one mission = a means to sell Tencent holdings in a way which would avoid South African capital gains taxes. This was set up and started long before Xi started growling.
Softbank is desperate for cash. In this environment, VC and private equity money is no longer freely flowing to Softbank. Especially after Son’s recent “missteps”. When you are stressed for cash, you sell what you can.
It’s something I’ve started to bear in mind when looking at US companies with a sizable core holdings by early investors, especially if they were outside financial groups rather than the early funders who still operate a firm.