Alibaba the hot topic at investing talk

THE potential of Chinese e-commerce giant Alibaba is tremendous, but will it be driven largely by the vision of just one man, founder Jack Ma?

Or can it become an institution in its own right?

That was the main topic of discussion among speakers at the Young and Savvy talk yesterday, after a student asked for the views of the speakers on the world's largest initial public offering.

About 130 people attended the two-hour seminar held at the Singapore Institute of Management.

Dr Zhang Jianlin, head of academic programmes at SIM Global Education, said the proportion of Chinese people shopping online is still relatively low, but more are expected to use the platform.

"I am very optimistic about Alibaba, I think the company has huge potential," he said.

Senior correspondent Goh Eng Yeow from The Straits Times offered a different take. Investors are "buying into the dream" of one man, Mr Ma.

"The thing about Alibaba is that it's a company set up in a communist country," he said. "I can imagine Mao Zedong rolling in his grave now that one of China's citizens has become one of the richest men on the planet because the company was successfully listed on Wall Street."

He said the firm was listed on the Hong Kong bourse at HK$13.50 in November 2007 and soared to HK$39.95 shortly after. But just a year later, it sank to a low of HK$4.30 and was eventually privatised at its IPO price of HK$13.50 (S$2.20).

Mr Goh said this shows that confidence in the firm will fluctuate depending on how investors feel about the company and Mr Ma, whose dream was to take China into the Internet age.

Mr Vasu Menon, head of content and research for wealth management at OCBC, drew a parallel with the time investors thought shares of computer giant Apple would tank after founder Steve Jobs died. "Steve Jobs created a culture, an institution, which has continued to thrive despite his death," said Mr Menon.

"I think if Alibaba is able to do the same and convince investors that it has gone beyond Jack Ma, then I think it has huge potential because it is leveraged into one of the biggest markets in the world."

But Dr Zhang also noted that much of Alibaba's success could be due to the Chinese government not having much involvement with the e-commerce industry.

Once the government becomes familiar with the industry, regulations might follow, he said. "There will be some kind of constraints on growth, and this is one of the potential risks."

Journalist Cheryl Ong was also a speaker in the panel discussion, which was moderated by money editor Lee Su Shyan, both from The Straits Times.

It was the fourth in a series of five talks on personal finance and investing, organised by The Straits Times with sponsor Frank by OCBC, and held in partnership with SIM Global Education.

The final Young and Savvy talk will be held on Oct 14 at the Nanyang Technological University.

Participants will get a goodie bag and have more chances to win a lucky draw prize of $10,000 by entering a financial literacy contest sponsored by OCBC.

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