Dan Wang

And shortly after that, the Communist Party smashed Ant Financial and prevented it from going public, which is still the case today.

Ant Financial is still not public.

And shortly after that, the Communist Party started taking the scalps of companies that didn't include only Alibaba, but also online education, e-commerce, antitrust actions against the entire sector.

So that part is real as well.

And then there's a third component of all of these risks that I think investors have a hard time putting to bed, which is the suite of geopolitical issues that are particular to China.

American investors aren't even buying Alibaba directly.

It is buying from a Cayman Island entity that has contractual relationships with ByteDance.

And are we really sure that we're getting something real here?

It's hard to lay that fear to bed.

China has capital controls, and that has deterred a lot of investment, including portfolio flows from a lot of investors.

And probably the biggest geopolitical puzzle for a lot of people is that Beijing is very clear that it intends to seize the island nation of Taiwan one day.

If it does so, it is pretty likely that it will face very hard sanctions from especially the U.S.

government as well as probably all Western governments.

We saw what happened.

In 2021, when Russia decided to move on Ukraine, a lot of the central bank reserves in Russia were frozen.

American portfolio managers were no longer able to invest in Russia.

And even McDonald's Corporation had to leave Russia because of American sanctions.

Can anyone really be sure that a few years from now, sometimes some people feel like even a few months from now, Beijing is going to initiate some sort of action against Taiwan?

This is not really my expectation that they will do something, but none of us can be sure that they won't do something.

And so long as that fear is present, I think that goes some length to explaining why it becomes pretty unappetizing.