Saxo Group Videos

Morningstar research believes in Alibaba, it's what they call a 'wide moat company' with around three hundred million active buyers and more than eight million sellers.

In China, Alibaba is the first place people go if they want to make an online purchase. So, Alibaba is already a profitable business with huge potential. With 32 percent annual expected growth over the next five years, the original IPO price set at 68 USD looks highly undervalued. Morningstar estimates the fair value price to be 90 USD and they were just about right, as was Saxo Bank's Peter Garnry; who also took the view that a fair value for the shares was around 90 USD. No one quite expected the shares to hit that sort of level, almost forty percent above the original IPO price on day one.

But, there's always a but, just how cautious should you be with a Chinese company, where the structure of the board is unique and the company limits the rights of minority shareholders? Many investors are being urged to exercise a certain amount of caution in light of the corporate structure as well as the market landscape in China where market regulation and legal power are at the whim of a one party state.