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00:00I'd post a great question to investors need to get used to this new normal. Yeah. So it's great to be here. And I would say definitely we're in a situation now where I think the regulatory reset. China has recognized some of the implications of disruptive technology and a lot of the regulatory changes are a reflection of acknowledging those disruptions. And so I don't think we're going to go back to the loose regulations that we that we witnessed before. At the end of 2020 when Alibaba was trading at 300 dollars a share we really are going to have to get used to a new environment. And it's gonna be a lot more difficult for these big tech platform companies. We were talking about just in terms of whether this is still a growth stock take a look at. Do you think we've reached a bottom for the stock. I think we're definitely getting close to a bottom in the short run particularly if the guidance is gloomier than the market expects and the market's already pretty negative. I think I given 10 cents guidance and some of these other tech companies they have talked about how they expect the Covid lockdowns to affect earnings over the next quarter or so. But I think you know it's it's still a very high quality company. They've got a strong business. It's just a more mature tech company now. And so investors are going to have to get used to slower growth in the core business. China e-commerce. And we'll have to come to expect changes to the company's business lines. You know more energy on cloud local services. And then importantly the expansion to overseas markets. And I think that's where Alibaba is putting a lot of resources. And the question is are there was going to be good investments or they can correctly predict trends and that's going to determine the growth trajectory. But we definitely have to get used to slower growth than what we've seen over the last decade or so. They do have a ton of cash. Philip I think at 70 billion something like that on their balance sheet. And to your point what should they be investing in. It's what I want to get to. Yeah yeah I think the the expansion of their business overseas is important because we're seeing growth slow down. Certainly the headwinds beginning of this year in consumer spending in China. This is a source of risk for Ali Baba. So if they can diversify globally. That would be an important step on continuing to invest in some of these new technologies cloud services local services things like the metaverse making bets on some of these trends. And one of the things that they've been doing in response to pressures on margins is trying to cut costs. I think one of the risks for Ali Baba and other big tech companies is in the process of cutting costs. What we don't want is for them to reduce investment to the point that in the short run it allows them to meet analyst's targets. But then in the long run they're impairing that long term growth. How positive is this push overseas because you wonder given how it does the investment justify itself. When you have market share in Europe which is less than 5 percent you have big big rivals like Amazon to compete with too. Yeah I mean that's of course that's the challenge for them. But the problem for them domestically is that it's becoming much more competitive. And with the changes in regulations on some of the barriers and some of the ways that they really impeded competition domestically those have been removed. And so they're facing more competition at home. There's a lot more room to grow internationally. So they're growing off a much smaller base and there's a huge opportunity there. But as you say it's going to be very difficult because there are some pretty strong incumbents Amazon among them. Philip you alluded to this. Obviously investors want to know do I buy this stock. Do you think it's at fair value right now given the outlook that you've outlined for us. But you're also underway to tell us why. Yeah I think you know when you compare to other 80 yards if I were choosing among offshore listed Chinese companies I think Alibaba is among the strongest. As I say I don't see a lot of downside risk here. But I also think they face big challenges uncertainly. The regulations are not going away. There's a lot of geopolitical pressure. Certainly the U.S. is still pushing for de-listing. Geopolitical tension could affect their plans to expand abroad. And so I think there are a lot of headwinds to Alibaba not least of which is is the issue. We're trying to grow the business as I mentioned before as the company matures. I think there are much greater opportunities if you're talking Chinese equities. I would be looking to onshore equities. So A shares many more opportunities. Companies that are more in line to benefit. So we're starting to see China inject stimulus in the economy as they recognize that their annual growth targets are a lot further off than they were before. And so I'd be looking for companies in the common prosperity theme companies that are going to benefit from infrastructure spending where we're seeing the potential that there's going to be a lot of construction going on as China starts pumping stimulus in. So I think there are better opportunities certainly over the next 12 months. Looking at a shares as opposed to some of these 80 cars and even the Hong Kong listings.

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Rayliant Phillip Wool Previews Alibaba Earnings

Rayliant Global Advisors Managing Director Phillip Wool previews earnings from Chinese e-commerce giant Alibaba. Wool says he's underweight on Alibaba's shares and sees much better opportunities in the China equity space. He speaks to Yvonne Man and David Ingles on "Bloomberg Markets: China Open". (Source: Bloomberg)

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