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Global business news twenty four hours

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plus mobile last and on your radio. This

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is a Bloomberg business flag from Bloomberg

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World Headquarters. I'm Charlie Pellett's

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stocks are trading higher. Heading for records

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the dial the SMP Nastac Hall

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Advancing SMP five hundred

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index now at twenty one eighty seven,

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up eleven points, a gain of five tents

0:26

of one percent. A batch of surprising

0:28

earnings from Macy's to Zurich Insurance

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Group lifting global equities. Macy's,

0:33

for example, surging eighteen point

0:35

six percent as it closes stores.

0:38

Macy's up six thirty two to forty thirty

0:40

two. Right now, we've got the Dow up a

0:42

hundred and twenty nine points to eighteen thousand,

0:44

six hundred twenty five, a gain there of seven

0:46

tents of one percent, and Nastaks

0:49

surging twenty seven points, up five

0:51

tenths of one percent to fifty two

0:53

thirty two. The tenure down twenty two

0:55

thirty seconds that yield one point five

0:57

seven percent, Gold down three sixty

1:00

the ounce three dropped

1:02

there of three tenths of one percent, and crude

1:04

oil up four percent today to Barrel.

1:08

I'm Charlie Pellets and that's a bloom Bird

1:10

business flash. You're

1:13

listening to Taking Stoff with Kathleen

1:15

Hayes and Kim Fox on Bloomberg Radio.

1:18

Ali Baba on fire today.

1:20

It looks like jack Ma's diversification

1:22

strategy is starting to pay off,

1:25

as revenue at Ali Baba Group

1:27

Holding accelerates to the fastest

1:29

since its record initial public

1:32

offering share price of five dollars

1:34

and thirty four cents right now ninety two dollars

1:36

and sixties six cents. And we're very happy

1:39

to welcome back Brendan Hearn.

1:41

He's chief investment officer at Crane

1:44

Shares. Ali Baba is the

1:46

number one position of Crane

1:48

Shares c s I China Internet

1:50

et F ticker symbol k w EB

1:53

just rated five stars from

1:55

Morning Star and as Brendan Nister minus

1:58

or the last three years, they've

2:00

beaten the SMP five hundred by

2:03

holding Chinese stock, So welcome

2:05

back, Thank you, Cather. So, first of all the news

2:08

on Ali Baba. What did we find out today?

2:10

Three key takeaways? Some

2:12

of the parts companies buying

2:14

back stock and lastly the

2:17

cloud computing. So some of the parts. What I mean is

2:19

Ali Baba is breaking out the different

2:22

divisions for the first time, we're able to apply

2:24

a growth rate. Analysts are going to be upgrading

2:26

this stock over the next several days, I believe, based

2:29

on aggregating these different

2:31

divisions. UM secondarily

2:34

was buying back stock over five billion dollars.

2:36

And lastly, they're cloud computing is

2:38

about to go profitable uh fousand

2:41

paying customers and as we've

2:43

seen with Amazon with a WS, the

2:45

ability to drive that drive

2:47

the stock potentially significantly higher. Why

2:50

the buying back stock? Why do that?

2:52

I mean, if you're a young company and you're

2:54

supposedly a tech company, why

2:56

can't they invest that money in things that will

2:59

grow in the future buy back the

3:01

stock. All it ends up doing is making the earnings

3:03

look better mathematically because you take

3:06

the shares out of circulation and stick him in

3:08

the treasury. That that's a valid

3:10

point of him UM. At the same time,

3:12

the stock has been affected by broad

3:14

China news. Last summer's Onshore

3:17

equity market rolled over. Ali

3:19

Baba has nothing to do with the Shanghai

3:22

and shenz En stock exchanges, but the stock

3:24

came down, but they got a lot to do with how

3:26

business in China is doing well.

3:28

Look at this past January where the

3:30

implementation the circuit breaker affected,

3:33

uh, the onshore equity market Shanghai

3:35

Shen's and Ali Baba stock got crushed.

3:37

So you you have investors the

3:39

Ali Baba baby goes out when

3:42

when the China water gets thrown out, and

3:45

um, there's there's Ali Baba has

3:47

nothing to do with

3:49

with the Chinese stock market. It's

3:51

so then why list there? So go ahead and just

3:53

list here in the United States. So list in London,

3:56

list somewhere outside of China. I mean, there are a lot of ways

3:58

to accomplish what you're talking about without

4:00

buying. It just seems odd when you're talking about

4:02

a growth company, a tech company, doesn't

4:04

it kind of make you question, g don't they have anything

4:06

better to do with that five billion? Well, and

4:09

I think you know you I p

4:11

O was priced at sixty eight dollars, It

4:13

got up to one twenty, it came all

4:15

the way back down below seventy. The

4:18

stock you're talking about a company that's growing

4:20

the top line at over thirty percent. Me in

4:22

here were one quarter you

4:24

know, long term growth rate over this

4:27

stock was just so inexpensive that

4:30

I think the management bought it. I love

4:32

that that that the company is buying back to stock and

4:34

that the the CEO and

4:36

the management team. UM is

4:39

on the same time of the same side of the table

4:41

as me as an investor talk

4:43

to us about cloud computing. When

4:45

I, you know, I think we will think of the competition

4:48

and people trying to get and you think of Microsoft,

4:50

Do you think of Amazon? I don't know if Ali Baba

4:53

is the first name that comes to a lot of minds, what are

4:55

they doing there? And why is that impressed

4:57

analysts? What you say, are gonna upgrade Ali Baba?

4:59

Now, yep, no, certainly, UM Ali Bamba

5:01

is the primary businesses is

5:04

in China basically selling

5:06

to Chinese companies

5:09

themselves, and and what they're

5:11

looking to do is to take advantage of the

5:15

very very advanced kind of technology ecosystem

5:17

in China. Just as kind of Amazon

5:20

is really you know, competing with Microsoft

5:22

and others and with their AWS division,

5:25

Alibaba is basically bringing that playbook to China.

5:28

They've had a great level of success

5:30

in a short period of time, over five thousand

5:32

paying clients. UM it's it's it's

5:34

about to start to hit an

5:36

inflection point where it's going to be monetized,

5:39

and the company guided that they believe they can

5:41

have over a million million paying

5:43

customers within a year. Ali

5:46

Baba is not just in the delivery

5:49

business, right, They're not just a broker products

5:51

and services. They're trying to get into a lot of

5:53

other businesses. Do you foresee a time

5:55

when they're going to split those businesses off

5:58

into separate units? Well think

6:00

to some degree. And financial

6:02

um, which is the equivalent

6:04

of say like a PayPal um. It's it's

6:07

I would argue, it's beyond what PayPal. It's

6:09

ubiquitous in China. Uh

6:12

it used to be called ali pay and and and financial

6:16

um. Ali Baba has a thirty eight percent ownership

6:18

position that's going to go public.

6:20

I believe in probably about a year's

6:23

time listening exchange to be

6:25

determined. UM. But but I

6:27

do think and and coming out

6:29

UM was part of the value that some

6:31

of the parts idea. So

6:35

in terms of growth are

6:38

Bloomberg News story points

6:41

out that you know you

6:43

can they they are the may the big thing in China,

6:45

but they've got still got growth in users,

6:47

big growth in users. Yeah, I mean

6:49

one of the one of the statistics

6:52

I love is the

6:55

utile is Internet utilization right here in the United

6:57

States is nearly we

6:59

would over fifty percent in two thousand

7:02

two. China just went

7:04

over fifty percent utilization Amazon

7:07

stock. Back in two thousand two, when the U S

7:09

went over fifty percent, utilization was at six

7:11

dollars. So unless you have a DeLorean

7:13

out front, you're able to get into

7:16

um China internet and

7:18

e commerce companies UM

7:21

at basically at a fifty percent, and

7:23

that that numbers are only going to go higher. And that's why

7:25

we're quite bullish, and that's self

7:27

serving and highly biased. But as

7:30

Somaly, as a shareholder myself, I'm a big believer

7:32

in k Web. Now, the position that you

7:34

hold in ali Baba is not a

7:36

reflection of an actively managed

7:39

decision making process. Correct,

7:42

So how do you foresee

7:44

the role of ali Baba in an

7:46

index when it is so dominant a

7:48

position? Well, ali Baba is

7:50

certainly a big, big beneficiary of what we believe

7:53

is with the top down policy, where where China's

7:55

economy as a barbell, you have export

7:57

driven manufacturing adversely affected

7:59

by tep global growth. Global growth

8:02

at the same time domestic consumption is

8:04

doing very well in China so well

8:07

as much as um I love Ali Baba,

8:09

Um, I love ten Cent, ten

8:12

Cent, the Facebook of China with their reach out application.

8:14

I love c Trip, the

8:17

the c Trip business a monopoly

8:19

on online travel in China. Say

8:22

they bought two of their largest the number

8:24

two and number three players. They have a monopoly. Um,

8:26

there's great. J D dot Com

8:29

just reported a few days ago

8:31

Great Great earnings Sina and Wi

8:33

bo Um Great earnings.

8:36

That this is the top down macro

8:38

issue, and that's where we love the basket approach.

8:41

We love diversifying. Tell me about the top

8:43

john macro. Great. Obviously,

8:45

there's plenty of Chinese consumers,

8:48

workers, people are making money. We know a

8:50

large part of China is still a poor country. And you

8:52

know they had a slow down. And again I think the big industrial

8:55

production numbers out of China tonight that's

8:57

and pulling back a bit. So it's

9:00

so fascinating, isn't it that I guess only the only part

9:02

of China's economy to do well

9:05

to spur this kind of growth for a company like Ali

9:07

Bab, And you can only manage what would happen if the rest

9:09

of the country could kind of digive itself out of poverty.

9:12

Well, certainly, China of

9:16

the population lived in cities today. It's

9:19

that correlation is one between

9:21

GDP per capita and China's urbanization,

9:24

the movement of people into cities UM

9:26

in China, proper housing,

9:29

UM, access to healthcare, education,

9:32

the becoming a middle class. And

9:34

then there's there's third definition of middle class.

9:37

So certainly, you know, there are liabilities

9:39

on the China balance sheet, but at the same time, there's

9:41

a there's assets, and we believe that

9:43

there are concerns around mpls

9:46

and banks and the X

9:48

what's going to happen with overcapacity and coal

9:50

stealing Alunum. Yes, what,

9:53

I don't want to hold them. I want to hold the part

9:55

of China that is growing and we get industrial

9:57

production tonight, Kathleen, I'll be up on

9:59

my terminal, but we to get retail sales. And retail

10:01

sales has averaged ten month.

10:04

You know, the monthly number for July. I

10:06

think it's going to be a really number

10:09

year over year, so it's pretty amazing off

10:11

of the month. That's true. That's

10:13

true, Um, But yeah, we know we love

10:16

the retail sales and in China where

10:18

your smartphone is your primary source of

10:20

entertainment and increasingly et commerce. UM

10:23

cell phones in China are very very big for a reason

10:25

because they spend a lot of time on them, and certainly

10:27

we see more as Ali Baba demonstrated

10:29

today, there's there's there's something going on

10:31

in China. I think that narrative is very

10:34

early in it being told. Thank

10:36

you very much for coming in and spending time with us. Brendan

10:38

Hearn is the chief investment officer for

10:41

Crane Shares. It can be followed

10:43

on Twitter at crane Shares

10:45

That's with a K and talking

10:47

about Ali Baba reporting

10:49

results that exceeded analyst estimates.

10:52

Some say it is a stellar report

10:54

card, reporting quarterly results that beat

10:57

estimates on all fronts. Sales during the last

10:59

quarter grew fifty nine

11:01

percent, the fastest growth since

11:03

it was listed in New York in

11:05

twenty fourteen. This is taking Stockheim

11:08

pim Fox along with my co host

11:10

Kathleen Hayes. This is Bloomberg