If you are one of the 100 million people that pay Amazon to be a prime member, you know the scope of Amazon. If you have a Facebook account, you will know the scope of Facebook. If you look across the Pacific Ocean and the billion plus market of China two companies dominate the landscape – Alibaba Group Holding and Tencent Holdings. According to Paul Mozur of the New York Times News Service, both the Chinese Internet companies are worth $400 billion. Amazon and Facebook are worth over $470 billion, should the Chinese companies be worth more? should the stock go higher to match the US ones?

In all things investing, everything is relative. If you are going to buy shares is one better than another? no one knows until you buy the shares. If others agree, the value goes up, if not then eventually you will need to find an alternative. Alibaba and Tencent cater to the day to day entertainment, shopping and spending habits of China’s middle class and sales are pushing profits up. For Alibaba first quarter profit rose 94% to $2.2 billion as sales continue to increase. Sales on e-commerce went up 56%

Part of the increase was from Alibaba makes money from vendors by charging them advertising on its platforms, last year Alibaba increased its fees. Will that continue? Alibaba has diversified into entertainment and cloud computing. Alibaba is trying to have more US vendors to sell to the Chinese foreign goods.

Alibaba owns Ant Financial which transfers money and has made a bid to buy MoneyGram which is based in the US.

Linking to dividend paying stocks, sometimes there is a reason why similar companies have lower valuations, even though they look the same. One reason is institutional buying, companies find it easier to own more of Amazon and Facebook, rather than Alibaba and Tencent (yes there are biases on Wall Street), however over time Wall Street is looking for sustainable growth and earning large profits and eventually similar companies will be valued in the same fashion. Either Amazon and Facebook come down or Alibaba and Tencent go up in value.

There are more questions than answers, till the next time – to raising questions.