Panda Claw
Over the past few months China has made a leap in cracking down on Chinese companies, crypto mining, and more. The Chinese government truly does not mess around and will do whatever it takes to have everything under their control. The reach of power seems to have taken another step forward, with the government now cracking down on stocks that trade on U.S. exchanges. And it’s not just small companies and new IPO’s getting halted by China, but even some of the bigger companies with trillion-dollar valuations. Companies of all sizes are facing the wrath of the Chinese government, from new IPO Didi, to tech giants such as Alibaba and Tencent — many companies are suddenly under major scrutiny as China vows to crack down on domestic companies that list on U.S. exchanges.
In total, China’s move could meddle with over $2 trillion of equities traded by American investors. In fact, both retail and institutional investors would be affected, with Alibaba being among the five-most owned stocks by hedge funds. According to the New York Stock Exchange, as of late April, about 60 Chinese companies were still planning to go public in the U.S. this year.
However, with China’s crackdown, this number could very well fall. Some experts have chimed in, explaining how American investors could react. For example, BCA Research chief global strategist Peter Berezin said in a note Wednesday. “U.S. investors will have to weigh the risks of owning ADRs at a time when tensions between Beijing and Washington remain elevated…” What do you think about China’s interest in regulating their companies? And will this be affecting your portfolio?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
