Opinion

The Edgy Optimist

Alibaba looks West

Zachary Karabell
Sep 27, 2013 19:08 UTC

Washington may once again be careening toward an abyss of its own making, but it is not the only story worth attending to. It makes good theater, but for now we don’t know how or if it will fundamentally shape our lives.

So what will? Half a world away, a Chinese company is considering a public offering. That would seem of even less import, but this is no ordinary company. It is Alibaba, which is to China what eBay and Amazon are to the United States. It is the leading e-commerce company in the Middle Kingdom, and it is led by a visionary entrepreneur named Jack Ma who has transformed that space in China as surely as Jeff Bezos has in the United States. And now, Alibaba wants to go public. The IPO could value Alibaba at as much as $75 billion. 

That would be noteworthy in and of itself, for sheer size and scope. More intriguing is that, according to reports, it is increasingly likely that the company will sell its shares not in Hong Kong, which is part of China, but instead in New York City, which is decidedly not. Only two years ago, Alibaba made a serious play to buy Yahoo, which was an early investor and is still a substantial shareholder. Now, Alibaba may soon join Yahoo and a host of other competitors as a publicly-traded company listed on a U.S. exchange.

While shares on any exchange can trade electronically anywhere in the world, where you list shapes what information you must report and how a company both communicates with and is perceived by the public and by investors. But listing in the U.S. versus Hong Kong is also a powerful symbol, because it shows where Alibaba believes its best interests will be served.

Jack Ma and his partners do not want to cede as much control of the company as Hong Kong rules would demand. Like many media and Internet moguls, they want to be able to determine the strategy of the company rather than relinquish those decisions to shareholders. The wisdom of that thinking may be debatable, but it is hardly unique. From Barry Diller and IAC to Larry Ellison and Oracle, many powerful publicly-owned American companies enshrine special rights and controls to those who created and run the companies.

Stormy markets, smooth seas

Zachary Karabell
Jun 28, 2013 13:23 UTC

You could be forgiven for missing the latest installment of market panic over the past ten days. It came and went like a summer thunderstorm — passing over the global financial landscape quickly and violently. But unlike meteorological events that inflict actual harm, the sharp gyrations of financial markets have increasingly less relationship to real-world economies and exist in their own never-never land of self-fulfilling prophecies and conventional wisdom.

The proximate cause of the swoon was June’s monthly statement from the Federal Reserve and Ben Bernanke’s comments that the Fed might taper its purchases of bonds sooner than many market players had anticipated. The exact quote wasn’t exactly dramatic (so few Fed quotes are!):

“The Committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year. And if the subsequent data remain broadly aligned with our current expectations for the economy, we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around midyear.”

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