r/baba
"Hong Kong stocks are falling hard as the chip narrative pulls capital from Hong Kong and pushes it into South Korea and Japan." Michael Burry
HK drop is technical rotation to semis, not fundamentals. BABA's core business and AI/Cloud CapEx remain strong for value investors.
- The current sell-off is driven by technical capital rotation into the semiconductor mania, not fundamental deterioration.
- BABA's fundamentals remain unchanged, and negative news like the Pentagon list is largely insignificant.
- When the semiconductor bubble bursts, capital will likely flow back to undervalued stocks like BABA.
- Technical pressure and capital outflow are breaking charts and pushing leading Chinese companies near their lows, which could continue.
- The current market ignores fundamentals, with insane PE ratios in other sectors making value investing difficult in the short term.
From Michael Burry's post today: "Remarkably, this technical pressure is pushing Chinas leading companies down near their lows again. This has broken their charts, and it does seem this can continue.
Nevertheless, this pressure is now a feature of the global semiconductor mania and therefore largely technical pressure, not fundamental" source: https://open.substack.com/pub/michaeljburry/p/trading-post-june-25-2026?r=4bc1o7&utm\_campaign=post&utm\_medium=web
The bloodbath in the HK market doesn't come from fundamentals; it's just that major investors and financial institutions are riding the semiconductor stocks. For BABA, nothing has changed in its fundamentals. Also, BABA being added to the Pentagon's so-called '1260H list' and Anthropic's comments about BABA are just drops in the bucket.
For all of those who are complaining or crying, I can't blame you. This stock makes you quickly understand if you can handle your investment thesis or not. But you also have to understand that the current market no longer cares about fundamentals. The PE ratios of some stocks are just insane and make no fucking sense, yet everyone is making a shit ton of money. My advice is: why compare them? (You can't be both a good trader and a good value investor at the same time.)
If those current PE ratios and the capital shifting to semiconductors end up not reflecting real growth, my only hope is that the graph above will also be true in reverse, and that when the semiconductor bubble bursts, the capital will flow back to undervalued stocks.
Also, if you believe that the huge CapEx from BABA in AI and Cloud will start to become profitable and add to the $25B FCF from retail, I'm pretty sure we're all going to be fine...