Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)

Email this Article

Send with mail | ahoo instead.
Required Needs to be a valid email
Required Needs to be a valid email
Are Chinese Stocks Safe to Own Right Now?
https://moneymorning.com/?p=1183444
Required Please enter the correct value.
Twitter
Stocks: $DIDI, BABA, TAL, TCEN

Are Chinese Stocks Safe to Own Right Now?

By Money Morning Staff Reports, Money Morning • July 27, 2021

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

China has been cracking down on companies with listings here in the United States sending shares plunging lower, some by more than 90% on the year.

It gets even worse too.

As China cracks down on companies with listings on American stock exchanges, American regulators are increasingly annoyed at the same firms for their lack of transparency. The showdown threatens the listings of some of the biggest China stocks.

If you own Chinese stocks, you're likely wondering if it's time to sell or if this is all going to blow over.

And if you don't own any, you might be looking at this as a potential buying opportunity.

There's no secret that Chinese tech stocks like Alibaba and Tencent are some of the hottest companies on the planet, and they're trading at a generous discount.

So which is it? Should investors sell Chinese stocks, or is this the buying opportunity of a lifetime?

Let's look at the facts...

Why Chinese Stocks Are Down

It started with tech stocks.

Jack Ma crossed the Xi Jinping regime and had to cancel a planned IPO for his Ant Financial division's IPO, which was set to raise $37 billion last year. Then his Alibaba Group Holding Ltd. (NYSE: BABA) was hit with a record $2.8 billion antitrust fine.

Once the dust settled, China went after Didi Global Inc. (NYSE: DIDI) after its blockbuster IPO in June. That sent shares reeling from a debut of $14 to $7.71 today.

Then last week, the Chinese government ruled that Chinese firms that teach students cannot accept capital from outside China. That has sent the handful of Chinese tech education forms that trade here in the United States tumbling. TAL Education Group (NYSE: TAL) plunged 81% over the last month.

Over the weekend, it ordered Tencent Music Entertainment Group (NYSE: TME) to end exclusive music licensing deals with record labels from all over the world.

It's a bloodbath for Chinese stocks right now.

Investors in Gaotu Techedu Inc. (NYSE: GOTU) have seen their ownership of the K-12 tutoring company fall by more than 90% so far in 2021.

China is cracking down on businesses and making sure that the powers in Beijing and not the new tech stars control the flow of data and information in China. It also wants American regulators to have less, not more, information about Chinese businesses and their customers.

U.S. regulators had expressed a desire to have Chinese companies be more forthcoming if they wanted to maintain their listing on U.S. exchanges. As a result, Congress passed legislation last year that made foreign companies listed in the United States agree to an audit within the next three years or face delisting.

China wants no part of that kind of scrutiny on Chinese tech companies, many of which are suspected of using stolen technology. The State Council in Beijing has said recently that rules for overseas listings would be revised.

For years, we have said that there needs to be a crackdown on Chinese stocks, especially the tech and education companies, but we meant by U.S. regulators. Unfortunately, the books never seem to add up right for us, and there have been numerous accusations of widespread accounting fraud.

We had no idea it would be the Chinese regulators cracking down to keep data and information out of the hands of American regulatory authorities.

Now that you know what's caused Chinese stocks to plummet, here's whether this an opportunity to buy or time to sell...

Why Chinese Stocks Are a Bad Bet Right Now

Despite what TV pundits might tell you, this isn't the time to be buying.

You have precisely zero legal rights when you own these shares. Suppose the Chinese government insists on immediate delisting of the companies from U.S. exchange. In that case, in today's digital world, you won't even have a worthless stock certificate to turn into a collector's item someday.

Getting caught up in a three-way showdown between Chinese and American regulatory agencies and the Chinese-based companies that listed their stock here strikes us as an exercise in frustration.

Yes, there is a chance these stocks may bounce back, but when the greatest risk-taker investing today says the risk is not worth the reward, I think we should probably listen.

Cathie Wood at Ark Investment Management embraces risk like few ever in the history of institutional money management. She is selling Chinese stocks and warning that these stocks are down and will stay down. We suggest that you might pay attention.

We understand the desire for speculative profits, but you can find plenty of opportunities right here at home where the government does guarantee us rights as shareholders and has watchdog agencies that will fight fiercely for us if fraud or some other chicanery is committed.

You probably have a better risk/reward set up playing meme stocks that pop up on Reddit chat boards.

Speculators have earned explosive profits in penny stocks since this rally began last year.

We have sectors of the technology and energy markets that can make you extraordinary profits over the next year.

Chinese tech and education stocks have fallen, and we don't think they can get up.

Nor do we think they are the last sector in which U.S.-listed Chinese companies will struggle.

There are simply better, less risky options out there.

Start by finding them right here...

Get Our Best Stock Picks Delivered Each Month

Join the Money Map Report today, and you'll have everything you need to help turn our longest-running research service into cash in the bank.

We believe the stocks we're recommending have the power to deliver life-changing profits - not just in the coming weeks or months, but far beyond.

You'll have all you need to be successful right at your fingertips - research, recommendations, and step-by-step instructions for building a lucrative portfolio.

Click here to learn how to join today.

Follow Money Morning on Facebook and Twitter.

7 Stocks to Sell Immediately

These popular stocks have hit their peak - get their tickers so you can take your profits and move on.

Access Now

7 Toxic Stocks to Sell Immediately

These popular stocks have hit their peak - get their tickers so you can take your profits and move on.

Access Now

Join the conversation. Click here to jump to comments…

Login
guest
guest
0 Comments
Inline Feedbacks
View all comments
LIVE
Visit Money Morning Live


Latest News

January 19, 2023 • By Money Morning Stock Research Team

These Stocks Could Go To $0

January 9, 2023 • By Money Morning Stock Research Team

The Government Is Pouring $391 Billion Into These Stocks - Buy Now

December 27, 2022 • By Money Morning Staff Reports

6 IPOs in 2023 You Can’t Afford to Miss
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Penny Nation Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Vega Burst Trader Flashpoint Trader Darknet Hyper Momentum Trader

Ā© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell My Info

wpDiscuz