Why I invested in Alibaba

Until recently I have invested mainly in UK shares. I want to diversify my portfolio to be less UK centric so last year I started considering more international opportunities. Since then I’ve bought about 10 different international shares. Economic growth in China is an opportunity that is not being addressed in my current holdings, so I was looking for opportunities to invest in that region.

During 2018 I tracked the news on a number of companies including Alibaba. Alibaba has many online businesses (see the logos above), somewhat analogous to Amazon, eBay and Google. This company has a massive market and steady growth. Despite current concerns of the impact of the Trump trade wars impacting growth in China potentially reducing the near term growth, the long term prospects still look very good.

Alibaba are listed on the US market so can be bought through the trading platform I use. I finally took the plunge to buy, during the recent dip in price, I bought two tranches one this May, then another recently in June. I buy in tranches to attempt to even out the volatility and avoid buying in at an inopportune price. The second tranche has enabled me to reduce the average cost per share. I will look to buy again in 6 weeks. Currently I’m down just over 4%, but I’m only two months in and I’m looking for an investment that will be in place for 5 to 10 years. I don’t intend to buy more than 2% of my total portfolio in this share though.

What I could have done better is to spend more time looking into the detail of the accounts and gain a better understanding of the business, but I have limited time and have been swayed by the coverage in financial media. Time will tell if this was wise.

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