Alibaba Isn’t Just a Play on Social and Political Stability

Alibaba Isn’t Just a Play on Social and Political Stability

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="When the novel coronavirus first rippled across China, I had extremely pessimistic thoughts about Alibaba (NYSE:BABA). Given our globalized societies, it was only a matter of time before the outbreak would spread across the world. Of course, this would place a very negative light on China, which would then impact its flagship Alibaba stock.” data-reactid=”12″>When the novel coronavirus first rippled across China, I had extremely pessimistic thoughts about Alibaba (NYSE:BABA). Given our globalized societies, it was only a matter of time before the outbreak would spread across the world. Of course, this would place a very negative light on China, which would then impact its flagship Alibaba stock.

baba stockbaba stock
baba stock

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Sure enough, China did come under pressure. Not surprisingly, President Trump has been the most vocal against the world’s second-biggest economy, criticizing it at every opportunity. At his campaign rally in Tulsa, Oklahoma, Trump mockingly called the virus “kung flu,” drawing intense uproar from minority rights advocates. As well, the President has consistently referred to the coronavirus as the “Chinese virus.”” data-reactid=”25″>Sure enough, China did come under pressure. Not surprisingly, President Trump has been the most vocal against the world’s second-biggest economy, criticizing it at every opportunity. At his campaign rally in Tulsa, Oklahoma, Trump mockingly called the virus “kung flu,” drawing intense uproar from minority rights advocates. As well, the President has consistently referred to the coronavirus as the “Chinese virus.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="To be fair, he’s not the only one with harsh words. For instance, Japan’s deputy prime minister and finance minister, Taro Aso, stated that some people have begun to refer to the World Health Organization as the Chinese Health Organization. With the international community doubling down on their anti-China sentiments, the situation didn’t look great for Alibaba stock.” data-reactid=”26″>To be fair, he’s not the only one with harsh words. For instance, Japan’s deputy prime minister and finance minister, Taro Aso, stated that some people have begun to refer to the World Health Organization as the Chinese Health Organization. With the international community doubling down on their anti-China sentiments, the situation didn’t look great for Alibaba stock.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="InvestorPlace – Stock Market News, Stock Advice &amp; Trading Tips” data-reactid=”27″>InvestorPlace – Stock Market News, Stock Advice & Trading Tips

However, as time went on, China’s relative strength began to show. Now, what once was a disaster waiting to happen looks like the best block in the worst neighborhood.

Primarily, China has none of the political or social challenges that currently plague the U.S. For example, we all know who will be in power in China. With the U.S., I believe it’s a toss up given the vulnerabilities of both Trump and challenger Joe Biden.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Further, according to the CIA World Factbook, China consists of 91.6% Han Chinese. When you have that kind of ethnic homogeneity, it’s difficult to spark anti-bigotry demonstrations.” data-reactid=”30″>Further, according to the CIA World Factbook, China consists of 91.6% Han Chinese. When you have that kind of ethnic homogeneity, it’s difficult to spark anti-bigotry demonstrations.

Alibaba Stock Looks Better Economically as Well

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Of course, we already know that China’s continuity of governance and relative social stability comes at a price. Alarmingly, it appears that whenever this Asian power encounters social strife, they take the most draconian path possible. Case in point is its concentration camps, which hold more than a million Uighurs, Kazakhs and other predominantly Muslim minorities, according to the Washington Post.” data-reactid=”32″>Of course, we already know that China’s continuity of governance and relative social stability comes at a price. Alarmingly, it appears that whenever this Asian power encounters social strife, they take the most draconian path possible. Case in point is its concentration camps, which hold more than a million Uighurs, Kazakhs and other predominantly Muslim minorities, according to the Washington Post.

Still, from a very cynical standpoint, you can invest in Alibaba stock knowing that China operates predictably. In contrast, you just don’t know what’s going to happen in the U.S. these days.

But Alibaba stock doesn’t just benefit from the obvious – and in some cases, nauseating – tailwinds. Rather, the e-commerce and technology giant also stands to gain from China’s superior economic platform.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="I realize that this is a controversial statement but here’s the reality – the U.S. is in a desperate crisis. While the unemployment rate is “only” 13.3%, weekly initial claims for joblessness benefits continues to number in the millions. Likely, this reflects economic pain spreading to multiple other job sectors besides restaurant and hospitality workers.” data-reactid=”37″>I realize that this is a controversial statement but here’s the reality – the U.S. is in a desperate crisis. While the unemployment rate is “only” 13.3%, weekly initial claims for joblessness benefits continues to number in the millions. Likely, this reflects economic pain spreading to multiple other job sectors besides restaurant and hospitality workers.

For now, millions of Americans are loving life because their white-collar jobs translate well to remote platforms. Thus, many will saunter down in their pajamas rocking a piping hot cup of coffee. Maybe they’ll do some work or pretend to. Either way, they’re collecting a paycheck and they don’t have to drive anywhere to get it.

But I would be shocked if that reality lasts. You see, once companies get used to the idea of remote work, they’ll soon realize they don’t need to pay the inflated salaries of lazy, underperforming, and entitled Americans.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As Financial Post contributor Howard Levitt notes, western companies can receive equivalent work for pennies on the dollar.” data-reactid=”40″>As Financial Post contributor Howard Levitt notes, western companies can receive equivalent work for pennies on the dollar.

China’s Middle Class to Rise at Our Expense

In prior articles about the Chinese middle class, I’ve expressed my skepticism regarding what I thought were fantastical growth projections. Primarily, on a per-capita basis, China is still very much a developed country. And because it’s about four times the population size of the U.S., growing a meaningfully robust middle class will take time.

But the path to those extreme projections is much more credible now, thanks strangely to the coronavirus. Because let’s face it – unless the federal government does something about it, American companies are more than willing to sell out American people for cheap foreign labor. And the Chinese are eager participants.

I appreciate the calls for social justice. But if you want a message we can all unify under, it’s American labor matters. Eventually, we will all be equal under the jackboot of Chinese communism or the substandard wages of the wrong end of globalism if we’re not careful.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="In the meantime, you may want to hedge against this potentially frightening change by buying Alibaba stock. In short, China has almost none of the problems that we have in the new normal. And when remote work becomes very remote, it’s the Chinese that will benefit, not us.” data-reactid=”49″>In the meantime, you may want to hedge against this potentially frightening change by buying Alibaba stock. In short, China has almost none of the problems that we have in the new normal. And when remote work becomes very remote, it’s the Chinese that will benefit, not us.

We’re currently too busy destroying each other to see the real challenge ahead.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.” data-reactid=”51″>A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.

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