(James Saft is a Reuters columnist. The opinions expressed are his own)
By James Saft
Sept 23 (Reuters) - Is it a) funny, b) disturbing, or c) irrelevant that Alibaba went public at a sky-high valuation just at the point at which the red-hot economy which spawned it seems content to settle into a creaky middle age?
Few of the investors throwing money at Alibaba hand over fist last week seemed to notice, but China really is now presenting a new version of itself to the world. Rather than riding to the rescue when growth slows, as recent industrial production data, the worst since 2008, shows it most clearly is doing, China now is taking a more cautious, passive stance.
"China will not make major policy adjustments due to a change in any one economic indicator," Finance Minister Lou Jiwei said on Sunday, adding that the country can't rely on government spending to speed infrastructure investment.
However you cut it, this raises questions for investors in Alibaba, a Chinese e-commerce company which executed the biggest ever initial public offering totaling $25 billion and saw its shares surge 38 percent in their first day of trading.
Those who do back the Alibaba online marketplace will doubtless make an argument along the lines that it isn't happening (China's still booming! Well, comparatively.) and it doesn't matter that it is (Alibaba can grow independent of China!), but of course financial markets aren't simply about truth; they also involve the valuation of uncertainty.
Investors of a skeptical bent have thus far focused on two areas of potential vulnerability for outside stakeholders in Alibaba, which is run by Jack Ma, a charismatic (I use this word in its modern sense of billionaire) former teacher of English.
The first boils down to corporate governance and the second to politics.
Ma has been straightforward about where shareholders come in his estimation, saying they rank third behind customers and employees. While that might be a good strategy, of more detriment to investors is a corporate structure which effectively insulates executives from outside pressure. Combine this with the fact that the IPO was of a holding company in the Cayman Islands which only has a contract that entitles it to Alibaba's profits, a matter about which there is some uncertainty in Chinese law.
That brings in the political angle, which is that companies in China, even globally famous ones, operate only at the pleasure of those in power. Laws can change, as can their enforcement. And while on the positive side Ma is China's richest man, and clearly has enough influence to be where he is today, on the negative side Ma is, well, China's richest man.