In Case Alibaba Is Next

Alibaba Chairman Jack Ma with fans in Kuala Lumpur (still via YouTube)

China Hasn't Been Sending Its Best

A recurrent theme this year has been bad news out of China. First, and most obviously, the novel coronavirus; then equipment China sent to other countries to help combat the virus. For example, last week Pakistan received what they expected were N-95 masks from China, only to find they were masks made out of underwear. 

Bad news out of China has also included revelations of fraud at Luckin Coffee (LK) and at TAL Education Group (TAL). As market technician Tim Knight noted recently, that raises questions about what confidence investors can have in Chinese accounting in general. 

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Indeed, the recent news out of Luckin Coffee and TAL Education should give shareholders in Alibaba (BABA) pause. Jim Chanos, who recently covered his short on Luckin Coffee, suggested earlier this month that investors avoid Chinese stocks "like the plague". Readers may recall that Chanos shorted Alibaba several years ago, and when he covered his short, he said he was still skeptical about the company's accounting. 

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