Morgan Stanley has released a 217-page report entitled The China Internet Report. The report is intended to inform potential investors on the “status, and potential evolution, of the Internet in China”.
After the crash of tech stocks in the late 1990′s, many people view these types of reports on new investment opportunities, with caution and skepticism. This is especially true of those reports (such as the current one) that are authored by Mary Meeker, who was closely associated with the excesses of the technology bubble of the late nineties.
Nevertheless, this report, which is available in PDF format at this location, makes for interesting reading.
The main message of the report seems to be:
1) The worldwide importance of the Internet continues to be underestimated. With an estimated 750million users online for at least 30min per day and growing at 15% annually, leading Internet cos should be able to generate double-digit growth rates.
2) China offers very good investment opportunities in general, and in the TMT (Technology-Media-Telecommunications) sector in particular.
The report claims not to offer stock picks, but rather provides profiles for eight public and twenty private Chinese Internet companies, such as Sina, NetEase and Sohu. Readers of the report are left to choose one of the companies listed, presumably 3721.com and then to phone in their buy orders to Morgan Stanley. Alexa currently ranks 3721.com as 7th.
This report, and reports from other investment advisors, typically list the following caveats as being associated with subject of investing in China:
-Low levels of average disposable income in the country
-Lack of transparency in government and the legal system
-Cultural and language barriers
-Strict limits on foreign ownership and investment
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{ 2 comments… read them below or add one }
I’d be curious to see what the potential growth rates for new Internet companies are today. I’d bet much higher.