ALIBABA, DIDI, TENCENT, CHINESE STOCKS - 4 MAJOR RISKS AHEAD - BUY MORE or STAY AWAY?? | Summary and Q&A

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July 19, 2021
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The Intelligent Investor
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ALIBABA, DIDI, TENCENT, CHINESE STOCKS - 4 MAJOR RISKS AHEAD - BUY MORE or STAY AWAY??

TL;DR

This video discusses the four major risks of investing in Chinese stocks, including cybersecurity issues, anti-trust crackdowns, potential delisting, and variable interest entity (VIE) structures. It provides insights into whether it is a good time to buy or stay away from Chinese stocks.

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Key Insights

  • 🥺 The regulatory crackdown in China has led to significant declines in Chinese stocks such as Alibaba, Tencent, and Didi Global.
  • 💱 The major risks include cybersecurity reviews, data collection issues, anti-trust crackdowns, potential delisting from the US stock exchange, and challenges with VIE structures.
  • 🙃 Chinese state-owned enterprises and companies related to defense and surveillance technology have a higher risk of delisting.
  • 🥺 VIE structures are being scrutinized by Chinese regulators, which may lead to restrictions or require approvals for new IPOs.
  • 🔬 It is recommended to consider the risks and portfolio size before investing in Chinese stocks.
  • ❓ Chinese stocks are currently undervalued due to regulatory concerns.
  • 😘 The likelihood of delisting all Chinese public companies is low, as it would have a significant economic impact.
  • ✳️ Investors may choose to underweight Chinese stocks in their portfolios to mitigate risk.

Transcript

hi everyone this viktor here welcome to the intelligent investors channel in this video i'm going to talk about the four major risks of investing in chinese stocks and whether we should buy more whole or stay away from chinese stocks as you may already know the current chinese regulatory crackdown is impacting all chinese stocks especially the larg... Read More

Questions & Answers

Q: What are the major risks of investing in Chinese stocks?

The major risks are related to cybersecurity reviews, data collection issues, anti-trust crackdowns, potential delisting, and challenges with VIE structures.

Q: Are Chinese stocks undervalued?

Due to the regulatory risks, many Chinese stocks, including those in the China Internet ETF, are currently undervalued.

Q: Should investors buy Chinese stocks now?

It depends on the portfolio size and existing holdings. For smaller portfolios or new investors, it may be more prudent to stay away. However, for larger portfolios with existing holdings, underweighting Chinese stocks is recommended.

Q: How likely is it that Chinese stocks will be delisted from the US stock exchange?

While the Holding Foreign Companies Accountable Act (HFCA Act) may lead to delistings, it is speculated that the largest Chinese tech companies will be allowed to stay on the exchange with certain limits to protect China's national security.

Summary & Key Takeaways

  • The regulatory crackdown in China is impacting Chinese stocks, especially large internet-based stocks like Alibaba, Tencent, and Didi Global.

  • Major risks include cybersecurity review and data collection issues, anti-trust crackdowns, potential delisting from the US stock exchange, and challenges related to VIE structures.

  • The video provides insights on whether to buy, hold, or stay away from Chinese stocks, with a recommendation to weigh the risks based on portfolio size and existing holdings.

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